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Toronto — The deepening global credit crisis and stock-market plunge could push Canada's largest province into a deficit, Ontario Finance Minister Dwight Duncan hinted today.
As recently as two weeks ago, Mr. Duncan confidently predicted that the province will post a surplus when he releases the fall economic outlook on Oct. 22. But today, Mr. Duncan would say only that he continues to monitor the impact of the global crisis on Canadian financial institutions and stock markets.
“Two weeks ago there weren't European banks being propped up,” he said, when asked by reporters why he has changed his tune. “The world is a very different place.”
Mr. Duncan said he has spoken to the chief executive officers of most of Canada's big banks, all of whom assure him that the domestic institutions are financially sound. But he acknowledged that no one can predict with any certainty what impact the turmoil, which is showing signs of moving deeper into Europe and Asia, will have on Canada.
“The world is changing and we don't know right now where this is all going to go,” he said.
The turmoil is forcing him to abandon growth forecasts contained in the annual budget released last March, he said.
He plans to meet this afternoon with economists from the Big Five chartered banks.
“The one thing I can say with confidence is projections for not just this year but for years out are now much worse than they were certainly at the time of the budget.”
The government booked a surplus of $600-million for fiscal 2008 after dipping into its reserve fund. It was the government's third consecutive balanced budget.
Updated figures will be unveiled in the fall economic outlook, along with a plan to address the ailing economy.
Opposition members accused Mr. Duncan of stalling for time by waiting until Oct. 22 to announce any cuts on program spending.
“There should be some recognition of the gravity of the situation,” Progressive Conservative MPP Bob Runciman told reporters. “He should be reacting more definitively and telling Ontarians what we can do at the provincial level to help moderate the impact.”
New Democrat Leader Howard Hampton said he fears that the government will not do much to help people falling deeper into poverty because of the economic slowdown.
“This is when you need an agenda to take on poverty,” Mr. Hampton told reporters. “This is when it's more important than ever.”
