Higher interest rates, cooling economy will strain provincial budgets: RBC economist
BNN Bloomberg
Most Canadian provinces emerged from the pandemic with less debt and more revenue than expected, but the tailwinds they’ve seen in the last two years are about to shift, according to an RBC economist.
“The favourable fiscal environment may be coming to an end,” wrote Rachel Battaglia in an online economic report examining provincial debt levels.
“Weaker economic growth and the likelihood of a recession, rising operating costs including increasing wage pressures, and upward pressure on debt servicing costs, are poised to hold back further improvement in provinces’ fiscal position.”
The COVID-19 pandemic initially put a massive financial strain on provincial governments in Canada, with most provinces plunging into deep deficits that many experts predicted would take years to re-balance, said Battaglia.
