Prime Minister Justin Trudeau’s government ran a deeper deficit than projected and broke a fiscal objective outlined by his finance minister, who resigned the day she was set to unveil new spending and revenue estimates.

A C$62 billion ($43.5 billion) deficit in the last fiscal year blew past former Finance Minister Chrystia Freeland’s pledge to keep the shortfall at or below C$40.1 billion. She was supposed to present the so-called fall economic statement on Monday but resigned just hours before her scheduled press briefing and parliamentary address that afternoon.

The government said higher-than-expected charges for Indigenous contingent liabilities, or money set aside to pay out claims to communities, and Covid-19 support allowances added C$21.1 billion to the deficit in the last fiscal year.

Canada will run a C$48.3 billion deficit in 2024-25, according to the update, which is around 1.6% of the country’s gross domestic product. The finance department expects a C$42.2 billion shortfall in 2025-26.

Monday’s 270-page budget document outlined key new expenditures including C$1.3 billion for border agencies over six years, an attempt to stave off US President-elect Donald Trump’s threat of 25% tariffs unless the flow of migrants and fentanyl over the crossing is halted.

The Trudeau government also announced an extension of tax breaks on business investment that were first introduced in 2018 after Trump’s tax cuts. Extending the tax breaks through 2030 will cost Canada C$17.4 billion and aim to address fears around the country’s competitiveness.

The government also said it plans to amend legislation to allow it to restrict imports to and exports from countries that “harm Canada.” This likely sets the stage for the country to retaliate against Trump’s tariffs by adding export taxes to potash and oil heading to the US.

Canada is also planning more tariffs against China to “combat unfair Chinese trade practices.” New levies are expected to be applied to imports of some solar products and critical minerals early next year, as well as to semiconductors, permanent magnets and natural graphite in 2026. 

The documents show program spending rising. Since the April budget, the federal government added a net total of C$23.3 billion in new spending or tax measures between 2024 and 2030.

Dominic LeBlanc, the public safety minister who joined Trudeau at a meeting with Trump at Mar-a-Lago last month, was appointed the new finance minister late Monday.

Trudeau’s nearly decade-long fiscal legacy has been characterized by running deficits that have helped boost consumption, but not markedly increased economic growth in the medium or long term. The document includes no plan to balance the budget.

The statement shows a declining debt-to-GDP ratio over the medium term, falling from 42.1% last year to 38.6% by 2029-30 due to upward revisions to growth projections. The government expects the nominal size of the economy to average 4.1% growth between 2024 and 2028, 0.1 percentage points higher on average than assumed in the 2024 budget.

In their assumptions for economic growth, the government used private sector forecasts from September – before the US election and Trump’s tariff threats — but said they were “adjusted to incorporate” upward revisions from Statistics Canada that boosted the size of the economy.

Canada’s debt is projected to rise to C$1.44 trillion by 2030. Public debt charges will rise to C$69.4 billion, from C$53.7 billion in 2024-25.