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Expect budget 2024 to 'be scant'

Experts anticipate that the forthcoming 2024 federal budget from the Canadian government will likely introduce only a handful of new measures due to stringent fiscal conditions. Analysts predict varying deficit figures for the current fiscal year.

James Orlando, a senior economist at TD Economics, emphasized in a recent report that the upcoming budget, slated for release on April 16, will primarily prioritize the previously announced pharmacare program. However, he cautioned that the full impact of this program on the budget depends on its expansion, as the current iteration only covers diabetic medication and contraceptives.

"Beyond pharmacare, new budget measures are likely to be limited, with significant resources earmarked for next year's pre-election budget. The government's attention is expected to remain on bolstering housing supply and mitigating the cost of living," Orlando stated.

Don Drummond, a professor at Queen's University and former chief economist at TD Bank, echoed this sentiment in an interview, anticipating the government to present what he referred to as an "election budget," mainly reiterating previously announced initiatives like the pharmacare bill.

Orlando also projected that the budget would indicate the government's adherence to fiscal targets set in 2023, despite higher-than-expected program spending. He estimated a deficit of $40 billion for the 2023-24 fiscal year. Conversely, a report from Desjardins predicts a larger deficit of approximately $47 billion.

Regarding monetary and fiscal policy, Drummond pointed out that the Bank of Canada's monetary policy report indicated a balance between aggregate demand and supply in the economy by late 2023. He emphasized the incongruity of maintaining a significant deficit in a balanced economy, suggesting alignment between fiscal and monetary policies.

"The government's projected deficit extending up to $80 billion by the end of the decade is diverging from the efforts of monetary authorities to stabilize inflation at two percent," Drummond remarked.

Overall, the anticipation for the 2024 budget suggests cautious optimism amid fiscal constraints, with a focus on targeted spending and aligning economic policies for long-term stability.