TORONTO, April 13, 2026 – Today, the Financial Accountability Office of Ontario (FAO) released a report that provides an overview and analysis of the 2026 Ontario Budget, including the outlook for the economy, budget balance, net debt, revenue and spending.
The economic outlook in the 2026 budget is similar to the projection in the 2025 Ontario Economic Outlook and Fiscal Review (Fall Economic Statement or FES). The 2026 budget expects Ontario’s real GDP, the broadest measure of economic activity, to grow by an average of 1.4 per cent a year from 2025 to 2028, the same pace as the outlook in the 2025 FES. Nominal GDP, the broadest measure of Ontario’s tax base, is expected to grow by an average of 3.8 per cent per year, 0.3 percentage points higher than projected in the 2025 FES.
Notably, significant downside risks have emerged since the 2026 budget’s economic outlook was finalized, which could result in weaker GDP growth in 2026. Recent data indicate that Ontario’s population growth and economic activity were weaker than anticipated in late 2025 and early 2026. Furthermore, the war in Iran has disrupted global supply chains and raised oil prices dramatically, which will lift inflation and could slow household and business spending.
The 2026 budget projects budget deficits of $12.3 billion in 2025-26 and $13.8 billion in 2026-27, before rapidly returning to balance in 2028-29, one year later than projected in the 2025 FES. The 2026 budget’s path to balance relies on average annual revenue growth of 4.7 per cent in 2027-28 and 2028-29, while spending growth averages 1.4 per cent per year.
The 2026 budget projects that the Province’s net debt will rise from $427.1 billion in 2024-25 to $529.3 billion in 2028-29, an increase of $102.2 billion (23.9 per cent). This increase is due to $31.7 billion in accumulated budget deficits and borrowing to finance an $82.0 billion increase in non-financial assets (largely infrastructure assets owned by the Province and the broader public sector), offset by an $11.5 billion accounting change to remove non-financial liabilities from the calculation of net debt.
The 2026 budget identified targets for three fiscal sustainability indicators (net debt-to-GDP below 40 per cent, net debt-to-revenue below 200 per cent and net interest-to-revenue below 7.5 per cent) which remain unchanged since the 2023 budget. The 2026 budget projects that all three fiscal sustainability indicators will worsen from 2024-25 to 2028-29. However, the net debt-to-GDP and net interest-to-revenue ratios are projected to remain below the government’s targets and the ratios’ 10-year historical averages, while the net debt-to-revenue ratio is projected to exceed the government’s target but stay below its 10-year average.
For more information, read the full report here.
Quick Facts:
- The 2026 budget’s outlook for real and nominal GDP growth is lower than the FAO’s projection in the Winter 2026 Economic and Budget Outlook (EBO) released in February 2026.
- Following the post-pandemic 2023 budget, which projected a balanced budget in the 2024-25 fiscal year, this is the third consecutive budget to extend the projected balanced budget date. These delays were due to significant upward revisions to the government’s spending projections, which were revised up by an average of $8.4 billion per year across comparable years in each budget.
- Compared to the 2025 FES, the 2026 budget’s revenue projection has increased by $9.2 billion over the comparable three-year period from 2025-26 to 2027-28, while planned spending in the 2026 budget has increased by $22.4 billion.
- Compared to the FAO’s Winter 2026 EBO, the 2026 budget projects $19.3 billion in higher cumulative revenue over the 2025-26 to 2028-29 period, despite the 2026 budget’s lower forecast for economic growth.
- Compared to the FAO’s Winter 2026 EBO, the 2026 budget projects $6.5 billion in higher cumulative spending over the 2025-26 to 2028-29 period, although projected shortfalls remain in the health (-$3.1 billion), children, community and social services (-$3.1 billion), education (‑$2.1 billion) and postsecondary education (-$0.3 billion) sectors.
- The 2026 budget projects total infrastructure spending of $111.3 billion over the three-year period from 2025-26 to 2027-28, an increase of $13.6 billion compared to projected infrastructure spending in the 2025 FES. This increase is largely due to an additional $11.0 billion in planned spending on transit infrastructure.
About the FAO:
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (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.
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For further information, please contact:
Victoria Coste l 647 519 5161 l VCoste@fao-on.org l fao-on.org