Ontario's Financial Accountability Office says it will ``likely prove challenging'' for the province to maintain balanced budgets beyond 2017-18.
The Liberal government says in its recent budget that it will eliminate its $5.7-billion deficit in that fiscal year and expects to stay in the black the following year.
But the Financial Accountability Office's chief economist says the government is relying on ``relatively optimistic assumptions for revenue growth.''
David West writes in a blog post for the office that the government projects total revenue to increase on average by 5.1 per cent a year to 2017-18, which is ``much higher'' than the average annual growth over the past four years.
He also says the revenue projections in the budget are based on 4.3 per cent average growth in nominal GDP, which is ``significantly'' above the average growth rate of the past three years.
West says the revenue projections are ``mainly buoyed'' by optimistic economic assumptions, additional federal transfers, as well as cap-and-trade proceeds and asset sale revenues.