Nojoud Al Mallees, The Canadian Press

OTTAWA – Treasury Secretary Chrystia Freeland will present the next federal budget on March 28.

This new federal budget will come as Canada’s economy is expected to slow significantly this year and potentially enter a recession as high interest rates put pressure on home and business budgets.

Secretary Freeland has already stressed that her government is focusing on fiscal discipline so as not to hamper the Bank of Canada’s efforts to control inflation.

“One of my main responsibilities is not to add fuel to the flames of inflation,” Ms. Freeland said at a news conference in Mississauga, Ontario on Wednesday.

“Financial responsibility is really important and I am very aware that we are preparing this budget at a time of significant budgetary constraints,” she added.

The Bank of Canada raised interest rates aggressively over the past year, taking its policy rate to 4.5%, the highest since 2007.

Economists point out that it is important that fiscal policy does not stimulate demand in the economy when the central bank is trying to curb it.

The Liberal government is facing increasing pressure to limit spending after years of deficits that have pushed up the country’s debt.

According to the latest projections from the House Budget Commissioner, the federal deficit for fiscal year 2022-2023 should be $36.5 billion.

This is a level well below the 2021-2022 deficit, which was $90.2 billion.

But if economic growth slows, government revenues are likely to suffer.

Assuming no new measures are taken and the temporary measures expire, PBO expects the deficit for fiscal 2023-24 to increase before steadily declining.

As noted in the Fall 2022 Economic Statement, Ottawa plans to introduce additional measures to support Canada’s green transition and remain competitive with the United States in clean tech.

“As a government, we truly believe that a historic window is opening in Canada right now to build Canada’s 21st century industrial economy,” Ms Freeland said Wednesday.

Robert Asselin, senior vice president of policy at the Business Council of Canada, believes Canada needs to do better in an era of fierce global competition.

“This requires a targeted response and measures that increase our productivity and ensure long-term economic growth,” Asselin said in a written statement. This political work will require more than a budget, but it must be started urgently.”

Health spending is likely to be another important part of the budget as the federal government has already announced 10-year agreements with most provinces.