Carney faces pressure to show results in spring fiscal update: former PBO

Prime Minister Mark Carney will be under pressure to show results from his economic agenda when his government tables an update to its fiscal outlook on Tuesday.

The spring economic statement comes one year to the day after the party secured a minority mandate in the federal election, a fourth win for the Liberals in a row, but the first under Carney.

It also comes the same week three new Liberal MPs are expected to be sworn into office, officially giving Carney’s government majority status.

The fall budget in November was a major test for the Liberals. At that time they held only a minority of seats, and required the support or abstentions from members of Parliament outside the party to get the spending plan passed.

The budget implementation act then went through months of deliberation and finally passed into law last month, with amendments from opposition MPs.

A few floor-crossers and byelection victories later, Carney’s Liberals now have more power to get bills passed.

So far, the Liberal agenda under Carney has mostly involved ramped-up defence and infrastructure spending and travels abroad to open up new export markets and secure foreign investment.

Carney has positioned all of those changes within a broader effort to reduce Canada’s reliance on the United States in response to U.S. President Donald Trump’s tariff regime.

Speaking to reporters on Thursday, Carney said Canadians are getting “good value” from efforts to attract investment and diversify Canadian exports. He said they should look for green shoots in the spring economic statement.

“We’re starting to shift things but we’re in no way satisfied,” he said. “We’re just getting started.”

Former parliamentary budget officer Kevin Page said the Liberals will be expected to show results in the spending update. He said he wants to see line items explaining how moves to meet NATO spending targets and speed up nation-building projects are affecting the government’s outlook.

“There’s some transparency pressures on the government,” said Page, now president and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa.

“What is the plan? How is it changing the overall fiscal picture? Are we getting value for money on some of that?”

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The spring update will also offer Canadians a look at how new spending items — like the boost to the GST benefit — and the energy price shock from the war in Iran are affecting Ottawa’s coffers.

Budget 2025 projected a deficit of $78.3 billion for the last fiscal year, almost double projections from a year earlier under then-prime minister Justin Trudeau.

After the fall budget, Statistics Canada reported revisions to past economic data that raised the nominal level of gross domestic product over the past three years.

Randall Bartlett, deputy chief economist at Desjardins, said that gives the federal government a better starting point for many of its fiscal guideposts compared with last fall.

“It’s really not in any way the result of actions taken by the federal government. It’s really just the luck of revisions going the way that the government would like, as opposed to the way they don’t,” Bartlett said.

The war in Iran could also give the federal government a lift as the conflict drives up the global price of oil. Inflationary pressures tend to push tax revenues higher and oil-producing provinces like Alberta and Saskatchewan get a GDP boost from higher prices globally.

Ottawa has offset some of those gains with some affordability measures — an increase to the GST benefit for lower-income households and the suspension of the excise fuel tax through to the end of the summer.

Uncertainty over how long the Iran war will last will leave some clouds on the horizon in Ottawa’s spring forecast. Bartlett said he expects the government will outline a few scenarios for how various outcomes for the conflict could affect federal finances.

Both Page and Bartlett said between new spending, upward GDP revisions and the Iran war shock, they don’t expect the federal government’s deficits and overall fiscal position have changed very much since the 2025 budget in November.

At that time, some observers cautioned that the federal government had eroded its fiscal buffer through its response to U.S. trade disruption — constraining Ottawa’s ability to spend sustainably.

“Canada used up most of its available fiscal room in Budget 2025 and now is barely within a fiscally sustainable position,” Bartlett said.

“Any adverse shock from here to the outlook could lead Canada into a fiscally unsustainable position.”

Conservative Leader Pierre Poilievre on Thursday criticized the federal Liberals’ increased spending, which he has blamed for inflation. He called for “low taxes, fast permits and international free trade” and pushed the government to reverse its deficit path.

Poilievre cited a report from the C.D. Howe Institute released Thursday that said Canada can “no longer pride itself on fiscal discipline.” Analysts at C.D. Howe argue Ottawa is understating fiscal and economic risks and ought to rein in spending and put the budget on a “credible path to balance” in the spring economic statement.

Despite domestic concerns, the federal Liberals have been praised for their fiscal management by the International Monetary Fund in recent weeks.

In its spring World Economic Outlook, the IMF projected Canada’s economy would grow at the second-fastest rate in the G7 — behind only the United States — over the next two years. A senior official at the organization also said in an interview with Bloomberg News published April 17 that Canada has the best fiscal position among its peers in the G7.

In December, the IMF also pushed the federal government to reinstitute a declining debt-to-GDP ratio as a fiscal anchor. But Finance Minister François-Phillippe Champagne said that wasn’t the focus of talks when he was in Washington for the IMF’s spring meetings earlier this month.

“We are in the strongest fiscal position and it’s coming from the international institutions that are looking at all the countries around the world,” he told reporters on Parliament Hill on April 21.

“The takeaway … was Canada standing out in the world.”

Bartlett said while he agrees with the IMF that Canada stands out among its peers, that was less a Canadian point of pride and more a reflection of other nations’ poorer fiscal standards. He calls Canada one of the “cleanest fiscal dirty shirts” among advanced economies.

Page said there is some merit to the IMF’s praise. The organization doesn’t have glowing things to say about countries lacking fiscal capacity, he said.

“Politically, I’m sure the government loves to get those messages from the IMF,” he said.

Page said Canada is in a fiscal position where it can run higher deficits as Ottawa tries to swing the economy to firmer ground. But until the government’s efforts start to bear fruit, he said, the federal budget is going to be under pressure.