Ottawa (AFP)

The coronavirus pandemic has caused the Canadian government budget deficit to explode to more than 343 billion Canadian dollars (224 billion euros) for the current fiscal year, Finance Minister Bill Morneau announced on Wednesday.

This deficit for the 2020-2021 fiscal year started on April 1 is ten times higher than the amount estimated by the Minister before the crisis.

It is equivalent to 15.9% of Canada's Gross Domestic Product (GDP).

The pandemic caused the shutdown of large parts of the Canadian economy from mid-March and for more than two months, severely restricting the federal government's tax revenue.

"In the worst downturn since the Great Depression, our government has stepped in to support the economy," said Mr. Morneau, painting a picture of the current economic situation in the House of Commons of Ottawa.

Justin Trudeau's Liberal government has put in place a $ 230 billion direct aid plan, representing 14% of GDP alone, as well as $ 85 billion in indirect aid.

This plan "is the largest peacetime investment in Canadian history," said Mr. Morneau.

As a result, the federal government's debt will explode, going from $ 765 billion (EUR 500 billion) in March 2020 to $ 1.236 billion (EUR 807 billion) by March 2021.

The debt-to-GDP ratio will drop from 31% to 49% during the same period.

"The government is in a solid financial position to help Canadians and the country's economy meet these funding challenges," said Morneau.

The financial rating agency Fitch recently deprived Canada of its highest AAA rating on its long-term debt, a decision that was not followed by other agencies, however.

Private sector economists consulted by the Minister of Finance predict that the Canadian economy will shrink 6.8% in 2020, its largest decline since the Great Depression, before rebounding 5.5% in 2021.

© 2020 AFP