Ontario's debt will grow to $350B in 4 years, warns financial watchdog

Ontario's financial watchdog warns the province's netdebt will grow by another $50 billion to $350 billion in the nextfour years.

• Ontario can balance budget in 2017-18 after 9 straight deficits: fiscal watchdog

• Moody's upgrades Ontario's credit rating outlook to 'stable'

• Ontario 'on track' to eliminate deficit, finance minister says

The Financial Accountability Office says the net debt will keepgrowing largely because of the Liberal government's $160-billion,12-year plan to invest in infrastructure and public transitprojects.

The FAO says the debt will also grow because it predicts a returnto annual budget deficits in 2018-19, even though the Liberalspromised to balance the books next year.

This year's provincial budget forecast Ontario's net debt wouldhit $326.8 billion in 2018-19, which was as far out as itsprojections went, so the FAO's prediction of a $350 billion debt by2020-21 is not a big stretch.

The FAO says Ontario's net debt "increased significantly"during the 2008-09 recession, and grew by $139 billionbetween thenand 2015-16.

Finance Minister Charles Sousa says the Liberals made adeliberate decision during the recession to stimulate economicgrowth, which he insists meant the downturn was not as deep or aslong as it might otherwise have been.

The government is making capital investments to promote long-termgrowth, he added.

"We know that investing in infrastructure spurs economic growthand increases GDP, which is why we've decided to make a historic$160-billion investment in roads, bridges, schools and hospitalsacross Ontario," Sousa said in astatement.

"Through prudent debt management, we have consistently keptinterest on debt costs below budget projections."

Interest on Ontario's debt is expected to be $11.75 billion thisyear and $12.45 billion in 2017-18, both lower thanforecast in the2015 budget.

On Monday, Ontario announced first quarter results showing 0.8per cent growth, or three per cent on an annualizedbasis, thestrongest among all G7 countries.

"Ontario remains firmly committed to eliminating the deficit by2017-18, and will do so in a way that is fair, equitable andprotects the valuable programs and services that Ontarians relyon," Sousa saidTuesday.