Ontario's fiscal plan over the medium term continues to follow through on policies that support jobs and growth to ensure future opportunity and prosperity. Medium-term revenue is projected to increase at an annual average rate of 5.1 per cent between 2009-10 and 2012-13, consistent with the economic outlook for nominal GDP growth.

Total expense is projected to increase by an average annual rate of 2.5 per cent from 2009-10 to 2012-13, which is about half the projected growth in revenue over the same period. This reflects the government’s continued commitment to follow through on policies that support jobs and growth while managing down growth in expenses.

Recognizing that the fragility of the global economy is a threat to Ontario's continuing economic recovery, the fiscal plan includes prudence in the form of contingency funds of $2.0 billion in 2010-11 to offset potential expense changes, and a reserve of $0.7 billion in 2010-11 and $1.0 billion in 2011-12 and 2012-13.

In total, the fiscal outlook for the Province of Ontario has improved by $3.4 billion in 2009-10, $1.4 billion in 2010-11 and $2.1 billion in 2011-12, compared to the projections made in the Fall of 2009.

The government is currently projecting deficits of $17.3 billion in 2011-12 and $15.9 billion in 2012-13. The 2010 Ontario Budget also lays out a realistic and responsible plan to cut the provincial deficit in half in five years and eliminate it in eight years.

Ontario's fiscal plan includes elements to help protect the province's overall fiscal objectives and contribute to the achievement of fiscal targets. The fiscal plan incorporates prudence in the form of a reserve to protect the fiscal outlook against adverse changes in the Province’s revenue and expense, including those resulting from changes in Ontario's economic performance.

The fiscal plan also includes contingency funds (both operating and capital) totalling $2.0 billion in 2010-11 to help mitigate expense risks that may otherwise have a negative impact on results.

A key element of the government's fiscal plan is the commitment to maintain a prudent level of accumulated deficit relative to the size of Ontario’s economy as measured by nominal gross domestic product (GDP). Ontario's debt-to-GDP ratios are expected to increase over the next three years, reflecting investments to preserve and create jobs, as well as investments in key priority areas. In 2007-08, the most recent year for which data is available for all jurisdictions, Ontario's net debt-to-GDP level was below the median for the provinces. In 2008-09, Canada and Ontario's combined net debt-to-GDP was below the average compared to G7 countries.

The Province's total debt is projected to be Cdn$212.4 billion as at March 31, 2010, compared to $176.9 billion as at March 31, 2009. The 2010-11 borrowing requirements are primarily the result of the deficit, investments in capital assets and the refinancing of debt maturities. To meet the borrowing requirements, Ontario will continue to be flexible, monitoring domestic and international markets, issuing bonds in different terms and currencies, and responding to investor preferences. Diversification of borrowing sources will continue to be a primary objective in 2010-11.

The effective interest rate (on a weighted-average basis) on total debt is estimated to be 4.57 percent as at March 31, 2010. For comparison, as at March 31, 1993, the effective interest rate on total debt was 10.14 per cent.