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Canada's contribution to the bailout of two Detroit auto makers could soar to more than $13-billion with the increasing need for cash by General Motors Corp., which has moved a giant step closer to filing for bankruptcy protection.

The cost to Ottawa and Ontario of the GM rescue package is now expected to be about $10-billion. The two governments are expected to receive an equity stake in a much-shrunken GM in return for the financing to keep GM operating during restructuring.

A tab approaching $10-billion would triple the two governments' original commitment in December of $3-billion in bridge loans to General Motors of Canada Ltd.

The numbers are viewed as still in flux.

The much higher figure for the auto bailouts is a key contributor to Ottawa's ballooning deficit, which the federal government now pegs at $50-billion, up from $34-billion in January. The Harper government has said a portion of that $16.3-billion increase in its shortfall projections is money set aside in case the high-risk loans to the car companies are never repaid.

“Based on this very marked upgrade in the budget deficit – in one fell swoop – I have to wonder if they aren't assuming as much as $10-billion or even more for their auto exposure,” said BMO Nesbitt Burns deputy chief economist Douglas Porter.

Bailing out the auto companies has become more costly because the auto market slump is proving to be deeper and longer than forecast late last year, when GM and Chrysler Canada Inc. first asked for government money.

GM has borrowed about $500-million from Ottawa and Ontario so far. The governments are also providing $3.8-billion to Chrysler, up from the $1-billion offered late last year.

The federal and provincial governments have committed to provide financing to the auto companies proportional to Canada's share of North American production, which in GM's case has fallen to about 15 per cent. The New York Times Wednesday reported that the U.S. government will provide about $50-billion to GM.

A bankruptcy filing could come as soon as Friday for GM, which turned 100 years old last September, and for much of that century was the world's largest auto maker. It was so dominant in its home market that the U.S. Justice Department considered breaking it into pieces to encourage competition.

Now the global automotive meltdown sparked by the U.S. financial crisis has forced the reckoning that GM has avoided for years. It will emerge from bankruptcy protection as a slimmed-down auto maker owned by the U.S. and Canadian governments and its largest union, the United Auto Workers.

“There's a pretty decent chance that GM is broken up into pieces in this reorganization process,” said veteran industry watcher John Casesa, managing partner of Casesa Shapiro Group LLC in New York. “It goes in this global company and comes out a regional company, largely GM of North America and a few overseas businesses, but loses GM of Europe and maybe some of the other big non-North American overseas subsidiaries.”

Ontario Premier Dalton McGuinty Wednesday said he does not think the rising price for the auto sector will push up the provincial deficit from a forecast $14.1-billion for this year. His government created a $3.2-billion contingency fund in this year's budget for the auto bailout.

“We're going to keep an eye on it,” he told reporters Wednesday.

But he said the province released its budget two months after the federal government's, which was in January. “We had a better understanding of the landscape that was to come,” he said.

GM and its Canadian subsidiary were given until Monday by the U.S. and Canadian governments to develop a restructuring plan that allows it to survive as a viable company able to pay back tens of billions of dollars in loans.

Since that 60-day window was given at the end of March, the company has slashed its dealer networks in Canada and the United States by more than one-third and reached labour agreements with the Canadian Auto Workers and United Auto Workers.

The CAW has approved its agreement, while the UAW will begin voting Thursday.

Bond holders, however, spurned GM's offer to give them 10 per cent of the equity in a restructured auto maker in return for their $27-billion (U.S.) in debt.

“They said no. That's it. They tried. That's why they're going to have to file,” said John Pottow, a professor at the University of Michigan who specializes in bankruptcy.

GM has already announced plans to streamline its bloated brand network in Canada and the United States. It has put Saturn and Hummer up for sale, and its Saab division is already engaged in a court restructuring process in Sweden.

It will kill off its Pontiac nameplate, scaling back to just Chevrolet, Buick, Cadillac and GMC.

The company is also in talks to sell off a majority stake in its European division, Adam Opel AG. Late last night, the German government was studying bids by Fiat SpA and another led by Canadian auto parts giant Magna International Inc. and U.S. investment firm Ripplewood Holdings LLC.

With a report from Associated Press