PBO flags high borrowing, ‘unusual’ losses at Crown corporations in report

OTTAWA — Parliament’s budget watchdog says parliamentarians should probe details about steep losses at Crown corporations and increased borrowing the Liberals outlined in their recent fiscal snapshot.

The fiscal and economic report released a week ago detailed the Liberals’ financial expectations, including a $343.2-billion deficit due to the COVID-19 pandemic.

Parliamentary budget officer Yves Giroux says in a report that there are other numbers behind the biggest ones that MPs and senators should question.

He points to projections that enterprise Crown corporations, such as the Canada Mortgage and Housing Corp. and Business Development Bank of Canada, will collectively lose $12 billion this fiscal year.

Giroux notes that loss is a sharp turnaround from the $7.3 billion in gains for the 12-month period ending in March.

He says losses are unusual for these Crown corporations and adds that each should provide detailed projections to Parliament as soon as possible about its COVID-19 liquidity programs.

Similarly, Giroux says the Liberals should provide details of their own borrowing, which his office estimates will exceed by $150 billion the ceiling set by federal legislation.

The budget office estimates the government’s planned debt issuance this fiscal year of $713 billion will cost $2.2 billion annually in interest.

The report released Thursday also notes $4.4 billion in spending for measures the government has yet to announce.

All the spending is expected to push the federal debt past the $1-trillion mark.

The Liberals had previously made a declining debt-to-GDP ratio key to their fiscal plans, but skyrocketing spending will push the ratio to 49 per cent from 31.1 per cent.

Giroux says fiscal transparency and accountability would be enhanced if the Liberals identify their new “fiscal anchor,” how they’ll measure their own successful handling of the budget and national economy, which wasn’t specifically laid out in the update last week.

This report by The Canadian Press was first published July 16, 2020.

The Canadian Press