Media Release: FAO projects budget surplus of $0.5 billion in 2022-23 followed by growing surpluses

[La version française suit le texte anglais.]


TORONTO, June 13, 2023  Today, the Financial Accountability Office of Ontario (FAO) released a report that provides its projection of the Ontario government’s fiscal position over the 2022-23 to 2027-28 period, based on current and announced government policies and the FAO’s economic forecast.

After two years of very strong economic growth, elevated inflation, high interest rates and a weaker global environment are expected to slow Ontario's economy in 2023 and 2024. As a result, revenue growth is projected to moderate from 6.5 per cent in 2022-23 to 2.0 per cent in 2023-24, before recovering over the rest of the outlook as the economy improves. Based on the FAO’s review of the cost of current programs and announced commitments, the FAO projects that program spending will increase by 7.7 per cent in 2022-23 and then average 3.6 per cent annual growth until 2027-28.

The FAO projects a budget surplus of $0.5 billion in 2022-23 compared to the government's projected $2.2 billion deficit. With revenue gains expected to exceed program spending growth over the outlook, the FAO projects a $10.6 billion surplus by 2025-26, compared to the government’s $4.4 billion surplus. The FAO projects the budget surplus will reach $16.4 billion by 2027-28 and, if the projected surpluses are used to pay down public debt, Ontario’s debt burden (as measured by the net debt-to-GDP ratio) would decline for an unprecedented seven consecutive years to 31.8 per cent in 2027-28, the lowest ratio since 2008-09.

The FAO’s economic and budget outlook is subject to upside and downside risks. On the upside, resilience in consumer spending and the tight labour market could last longer than expected, improving Ontario’s economic and revenue outlook. On the downside, further interest rate increases from the Bank of Canada, a possible recession in the United States and spending pressures that could materialize, such as higher than expected wage settlements, could negatively impact Ontario’s economic and budget outlook.

To learn more, read the full report here.

Quick Facts:

  • Ontario’s population growth has exceeded expectations, with the first quarter of 2023 marking the fastest year-over-year increase since 1972.
  • The FAO’s revenue forecast is $3.4 billion lower than the government's outlook in 2022-23 and $4.2 billion lower by 2025-26, due to the FAO’s less optimistic projection of inflation-driven revenue increases in the near term.
  • From 2022-23 to 2025-26, the government’s spending plan is $5.6 billion higher on average in each year compared to the FAO’s projection. This results in a cumulative $22.6 billion in excess funds that the FAO estimates are not required to support the cost of current programs and announced commitments.
  • The interest on debt-to-revenue ratio, a measure of budget flexibility, is projected to decline to a record low of 5.5 per cent by 2027-28, indicating the government will have a larger share of revenues available for program spending.

About the FAO

Under the Financial Accountability Officer Act, 2013, the Officer provides independent analysis on the state of the Province's finances, trends in the provincial economy, and related matters important to the Legislative Assembly of Ontario. Visit our website and follow us on Twitter and LinkedIn.


For further information, please contact:
Jessica Martin l 647.527.2385 l l