With British Columbians scheduled to go to the polls in 158 days, the Bank of Canada this morning slashed interest rates to the lowest point in a half-century and announced the worst-possible economic news for B.C.'s major political parties: the nation is in the early stages of a recession.

Both the governing BC Liberal Party and the opposition New Democratic Party have made balanced budgets a centre-piece of their respective fiscal policies. Gordon Campbell's Liberals introduced balanced budget legislation in 2001, while Carole James and the NDP have repeatedly avowed their commitment to match government expenditures with revenues.

Such a feat is relatively easy in good economic times, when commodity prices are on the rise and unemployment rates are in the low single-digits, but it is much more difficult — if not impossible —when the economy tanks.

"The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated," Canada's central bank announced earlier today.

Consequently, "Canada's economy... is now entering a recession as a result of the weakness in global economic activity. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses."

To help the country make it through the worsening economy, the Bank cut its overnight interest rate by 75 basis points to just 1.5 percent.

It is the third consecutive rate cut by the bank in the last three months. On Oct. 8, the Bank of Canada joined the leading central banks of other industrial countries in simultaneously slashing rates, a coordinated measure the Bank said was "unprecedented." Canada's overnight rate was then trimmed by 50 basis points to 2.5 percent.

That cut was followed by another on Oct. 21, when the central bank rate dropped the lending rate by one-quarter of one-percent, to 2.25 percent.

The move this morning to 1.5 percent puts the overnight rate to its lowest point since the summer of 1958.

By law, B.C.'s fiscal plan for 2009/10 must be unveiled on Feb. 17, and, again by law, it must show that government expenditures do not exceed revenues. Twelve weeks later, on May 12, a provincial general election will be held.

Election platforms will be presented to the public next spring by both the BC Liberals and the New Democrats, and in ordinary times each document would confirm their respective party's commitment to a balanced budget. But how credible would such claims be should the economy, as forecast today by the Bank of Canada, be sinking ever deeper into an economic recession?

The looming challenge for B.C.'s major political parties is unpalatable for both. Should they maintain the fiction that balanced budgets are achievable when government revenues (largely from income and consumption taxes, and natural resource royalties) have plummeted, or should they 'fess up and acknowledge that one or more deficits will appear in the near-term?

And if the latter course is adopted, which party will have the gumption to go first? Is it better to lead, or to follow?

Such are the fiscal and political calculations that must be made as British Columbians prepare for the province's 39th general election, and as the country slides ever deeper into an economic recession "broader and deeper" than was envisioned just a short while ago.

Veteran political analyst Will McMartin is a Tyee contributing editor. Read his recent Tyee features here.