FOR IMMEDIATE RELEASE:
[La version française suit le texte anglais.]
FAO PROJECTS ADDITIONAL BORROWING AUTHORITY REQUIRED FOR 2020-21
TORONTO, August 20, 2020 – The Financial Accountability Office (FAO) has released a report providing an overview of the Government of Ontario’s borrowing authority, the process of how borrowing occurs and the reporting responsibilities of the government with respect to its borrowing.
In the March 2020 Economic and Fiscal Update, the Province projected a total funding requirement of $49.7 billion for 2020-21, reflecting an estimated budget deficit of $20.5 billion. Based on this fiscal projection the Province has borrowing authority of $54.3 billion for 2020-21, with $24.2 billion authorized by the Ontario Loan Act, 2020, $26.6 billion authorized by the Financial Administration Act, and $3.5 billion from previous Loan Acts.
However, in the 2020-21 First Quarter Finances the government updated its forecast for the budget deficit to $38.5 billion, raising the funding requirement to $66.7 billion. Given the higher funding requirement, the FAO expects the government will be required to seek significant additional borrowing authority for 2020-21.
In the past, higher than projected deficits - as occurred following the global financial crisis in 2009-10 - have required the government to pass a second Ontario Loan Act to provide additional borrowing authority.
- From 2000-01 to 2008-09, the average amount of long-term debt issued by the Province was $19.6 billion annually. Since then, the Province has been issuing long-term debt in larger amounts, averaging $35.9 billion annually from 2010-11 to 2019-20.
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) 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 at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.