Future deficits could erase progress made on debt: budget officer

A low economic growth scenario could mean deficits of more than $100 billion over the next five years and negate the gains made in fighting the overall debt, the parliamentary budget officer said.

But even with average growth predicted, forecasters are projecting deficits of $46 billion over the next five years, Kevin Page said.

Page released budgetary projections ahead of Tuesday’s budget based on the forecasts of 11 economists.

He said forecasters are predicting a decline in GDP growth of 0.8 per cent for 2009-2010, meaning the deficit that year could reach $13 billion.

But he cautioned that figure does not include a fiscal stimulus package, which could range from $15 billon to $30 billion and possibly put the budget in the red by $43 billion for 2009-to 2010.

If the economic downturn is worse, Page said a low growth scenario, which would include a contraction of the economy by 1.5 per cent in 2009 to 2010, could result in deficits of $105 billion over the next five years.

Add on the stimulus package and the figure would total more than the $105 billion of national debt the government has paid off over the past 11 years.

"We’ve made huge progress on our fiscal situation over the past 11 years. We've had balanced budgets with surpluses. We've put $105 billion down in debt, something we should be very proud of and it's actually positioned us relatively well going into this cyclical downturn," Page told CBC's Politics.

But he said “you would be turning the clocks back on the progress we’ve made in terms of reducing the absolute dollar value of the debt,” Page told host Don Newman.

Asked about the projections, Finance Minister Jim Flaherty did not dispute the numbers.

"What we are going to do is what we've been asked to do by Canadians from coast to coast. We are going to address Canada's needs at a time of global recession. Canada needs some spending on the stimulus side…and that will result in a substantial deficit," he told the Canadian Press.

The minister added that Tuesday's budget will show how the government intends to emerge from deficits as the economy comes out of its deep slump, but did not answer how long he believes that will take.

With files from the Canadian Press