The government is currently projecting a balanced budget in 2007–08. Overall, the fiscal outlook remains prudent, and a balanced budget is projected in both 2008–09 and 2009–10.

The prudent fiscal outlook is reflected explicitly in the reserves, which are set at US$0.75 billion in 2007–08 and US$0.84 billion in each year over the medium term, in recognition of the risks that could materialize due to unanticipated changes in Ontario’s economic outlook or in Provincial revenue and expense.

NOTES:
Numbers may not add due to rounding

Key elements of the government’s fiscal plan that will ensure the achievement of ongoing balanced budgets include:

• making disciplined decisions that hold the average annual rate of growth in total expense to less than the average annual rate of growth in total revenue over the medium term
• taking decisive action to strengthen Ontario’s economic advantage through a plan to enhance competitiveness and invest in people and communities and infrastructure
• promoting principled and sustainable federal–provincial fiscal arrangements
• maintaining a prudent debt-to-GDP ratio
• maintaining a cautious and prudent fiscal plan, including an annual reserve.

A key element of the government’s medium-term fiscal plan is the commitment to maintain a prudent level of Provincial debt (where debt is defined as accumulated deficit) relative to the size of Ontario’s economy as measured by nominal GDP.

In line with Ontario’s strong fiscal performance in recent years, the Province’s debt-to-GDP ratio improved from 24.3 per cent in 2004–05 to 19.1 per cent by 2006–07 — its lowest level in 15 years. It is projected to improve even further to 16.9 per cent by 2009–10.

NOTES:
* Debt is defined as accumulated deficit.
** The substantial decline in 2005–06 was primarily due to a one-time reduction of US$15.3 billion to the Province’s accumulated deficit resulting from the inclusion of hospitals, school boards and colleges in the Province’s financial statements, reflecting the balance of the sectors’ assets less their liabilities as at April 1, 2005.

The Province’s total debt as at September 30, 2007 was US$151.0 billion. The most significant component of the borrowing program is the refinancing of maturing debt. The Province will continue to take advantage of opportunities to schedule maturities into years that currently have lower levels of maturing debt.

The effective interest rate (on a weighted-average basis) on total debt as at September 30, 2007 was 5.95 per cent, compared to 6.02 per cent as at March 31, 2007. For comparison, as at March 31, 1993, the effective interest rate on total debt was 10.14 per cent.