Parliamentary Budget Office Criticizes Assumptions in Canada’s 2025 Budget

Canada’s Parliamentary Budget Office (PBO) has released its review of Budget 2025, questioning several key government assumptions. The projected deficit has risen to $78.3 billion, compared with the PBO’s earlier estimate of $68.5 billion.

The PBO argues that Ottawa’s definition of “capital investments” is far broader than international standards. Under the PBO’s methodology, such spending would be 30% lower and the operating budget would remain in deficit. The office recommends establishing an independent expert panel to define capital categories.

Stress testing shows only a 7.5% chance that the deficit-to-GDP ratio will decrease each year as planned. While long-term debt levels may stabilize, fiscal room remains limited.

Although the government plans to save $60 billion over five years, 11 major departments — including the RCMP, CBSA and National Defence — are required to cut spending by only 2%. The PBO notes insufficient details on how these cuts will affect services.

Fitch Ratings has already warned that rising debt is putting pressure on Canada’s AA+ credit rating.