Canada's deficit lower than expected thanks to higher oil prices

Key Points:

• Canadian Prime Minister Mark Carney announced a lower-than-expected government deficit, with the country's debt now about 14% lower than previously projected due to a surge in oil prices and economic resilience.
• The spring economic update revises the 2025-26 fiscal year deficit forecast from C$78.3bn to a smaller figure, allowing for increased spending on workforce training and the establishment of Canada's first sovereign wealth fund, the Canada Strong Fund, with an initial C$25bn investment.
• The Canada Strong Fund will invest in sectors such as energy, infrastructure, mining, agriculture, and technology, and will permit individual Canadians to invest directly.
• Despite positive fiscal news, the update warns of ongoing risks from global uncertainties including US tariffs and geopolitical tensions, particularly the US-Israel conflict with Iran, while projecting continued economic growth.
• The government introduced a temporary fuel tax break to ease consumer costs, but deficits are expected to persist over the next five years, with opposition parties calling for more aggressive spending cuts and budget balancing.