Municipal Insolvency In Canada

The COVID-19 pandemic is projected to have a devastating impact on the Canadian economy. A recent report released by the Parliamentary Budget Officer indicated that the federal deficit could exceed $250 billion in 2020-21 and that Canada's GDP could contract by as much as 12 percent.¹ These projections should come as no surprise given the effective shutdown of the Canadian economy and the financial measures adopted by all levels of government to limit the economic impact of the pandemic.²

Much of the focus regarding the pandemic's impact has been on the federal and provincial governments. However, municipalities are not immune to the resulting economic challenges. Most municipal employees and services have been deemed essential by the federal government. At the same time, municipalities have been forced to close certain revenue generating facilities and many have offered property tax deferrals.