Canada's $78.3 Billion Budget Gap Is Third Largest Ever, But Not Alarming: BMO

06:10 AM EST, 11/06/2025 (MT Newswires) -- Canada's projected $78.3 billion federal budget deficit for the current fiscal year -- ending March 31, 2026 -- is the third largest on record in nominal terms, said Bank of Montreal (BMO).

However, at 2.5% of gross domestic product, it barely stands out when compared with the past 50 years, noted the bank.

The median balance since 1970 has been a deficit of just under 2% of GDP -- which is the expectation for the next fiscal year. In other words, it's a significant deficit, but not in the same league as the "bad old days" from 1975-95, stated BMO.

The story becomes a bit more nuanced when the bank looks at the deficit excluding interest charges. On that basis, Canada is expecting a shortfall of almost $23 billion, or about 0.7% of GDP.

That's a bit wider than the norm, added BMO. In fact, since 1970, the median excluding interest balance has been a small surplus. It compares with a surplus of $17 billion last FY.

So, on net, there is measurable fiscal support for economic growth this year, according to the bank.

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