TORONTO — Ontario is maintaining its $13.8-billion deficit forecast for 2026–27 as the provincial government navigates slower economic growth, global uncertainty and the effects of U.S. tariffs, according to its latest quarterly fiscal update.
The province released its 2026–27 First Quarter Finances on Aug. 14, providing the first update to Ontario’s economic and fiscal outlook since the 2026 Ontario Budget: A Plan to Protect Ontario. Despite changing economic conditions, the government’s key fiscal projections remain largely in line with those presented in the budget.
Revenue is now forecast at $232 billion, while program spending is projected to reach $227.1 billion. Ontario’s net debt-to-GDP ratio is expected to remain at 37.7 per cent.
Ontario Revenue Forecast Rises Slightly to $232 Billion
The province’s revenue projection has increased by $0.1 billion compared with the 2026 Budget forecast. Program expenses have also increased by $0.1 billion, leaving the overall deficit projection unchanged at $13.8 billion.
Finance Minister Peter Bethlenfalvy said the government intends to continue balancing fiscal management with measures aimed at supporting businesses, workers and households.
“Our government’s prudent and responsible management of Ontario’s finances has enabled us to navigate economic uncertainty and make strategic investments that strengthen our economy and communities, while cutting taxes,” said Peter Bethlenfalvy, Minister of Finance. “Our plan will continue to protect Ontario’s workers, businesses, and jobs from the impacts of U.S. tariffs while building a more resilient and self-reliant economy for decades to come.”
The government said its fiscal outlook remains largely unchanged despite increased uncertainty affecting the domestic and international economies.
Economic Growth Forecasts Face Increased Pressure
Private-sector forecasts for Ontario’s real gross domestic product growth in 2026 have moderated since the provincial budget was released.
The government attributed the change to weaker-than-expected economic growth during the first quarter as well as continuing overseas conflicts. Trade uncertainty and the effects of U.S. tariffs are also among the economic challenges cited by the province as it seeks to strengthen Ontario’s domestic economy.
The quarterly update comes as the government continues to emphasize investment intended to improve Ontario’s competitiveness and reduce exposure to external economic shocks.
Ontario Maintains 37.7% Net Debt-to-GDP Projection
Ontario’s net debt-to-GDP ratio, an important measure of the province’s debt relative to the size of its economy, continues to be forecast at 37.7 per cent, unchanged from the 2026 Budget.
Interest and other debt servicing charges are projected at $17.2 billion, also consistent with the budget forecast.
The province continues to hold a $1.5-billion reserve intended to provide protection against unexpected changes in revenue and expenses. That reserve has not been altered since the budget.
Following approved spending allocations and investments during the fiscal year, Ontario’s Contingency Fund has a remaining balance of $1.3 billion for 2026–27.
Credit Rating Agencies Maintain Stable Outlooks
The province also pointed to its credit ratings as an indicator of its fiscal position. Following the release of the 2026 Budget, all four major credit rating agencies reaffirmed Ontario’s AA credit rating with stable outlooks.
Maintaining a strong credit rating is important for the province because borrowing costs can affect the amount of public money required to service Ontario’s debt.
At the same time, the unchanged $13.8-billion deficit demonstrates that the province continues to face a sizeable gap between overall revenues and expenditures as it funds public services and economic initiatives.
Next Ontario Fiscal Update Expected Later in 2026
The first-quarter report represents an early snapshot of the province’s financial position, meaning revenue, expenditure and economic projections could change as additional economic data becomes available during the fiscal year.
Ontario’s economic performance will remain sensitive to developments affecting international trade, global conflicts and business investment, as well as domestic consumer and labour-market conditions.
The government is expected to provide its next comprehensive assessment through the 2026 Ontario Economic Outlook and Fiscal Review later this year.
For now, Ontario’s first-quarter numbers indicate limited movement from the assumptions presented in the spring budget: slightly higher projected revenue has been matched by an equivalent increase in program expenses, while the province continues to forecast a $13.8-billion deficit and a 37.7 per cent net debt-to-GDP ratio.