OTTAWA - The parliamentary budget officer anticipates a significant rise in Ottawa's annual deficit, projecting it will reach $68.5 billion this year. This figure marks an increase from last year's deficit of $51.7 billion. Interim Parliamentary Budget Officer Jason Jacques shared these insights in a new report.

The report, released ahead of the fall budget scheduled for November 4, provides parliamentarians with a baseline estimate of the federal finances. It indicates that the federal debt-to-GDP ratio is no longer on a downward trajectory over the medium term. This ratio had previously served as a crucial fiscal anchor for the government.

The updated fiscal and economic outlooks do not incorporate plans to gradually increase defense spending to meet NATO's updated benchmark of five percent of GDP by 2035. Additionally, it does not account for the government's announced intentions to cut public service spending over the next three years.

However, the report does include approximately $115.1 billion in net new spending over five years that the government has announced since the last fiscal update in December. The budget office attributes the rising deficits to a weakened economy, which has been impacted by Canada's trade tensions with the United States. This situation is contributing to lower tax revenues while the government continues to increase capital spending.