(Adds finance minister’s quote, details) TORONTO, Aug 12 (Reuters) - Ontario, Canada’s most populous province, on Thursday projected a smaller budget deficit for the current fiscal year as progress on inoculating its population against COVID-19 helped boost the economic outlook, a fiscal update showed. The province projected a budget deficit of C$32.4 billion ($25.9 billion) for the 2021-2022 fiscal year, compared to the C$33.1 billion deficit forecast in a budget in March. The fiscal year began on April 1. Stronger-than-expected U.S. and global growth, a resilient domestic economy and significant progress on COVID-19 vaccinations have resulted in faster projected economic growth in Ontario, the province said. About 63% of Ontario’s population has been fully vaccinated against COVID-19, provincial data shows. “We’ve always been clear that it would be growth that would fuel our return to a more sustainable fiscal position,” Ontario Finance Minister Peter Bethlenfalvy said in a statement. The province raised its growth forecast for 2021 to 5% from the 4% projected in the March budget. That helped boost its revenue projection by C$2.9 billion, of which it allocated C$2.2 billion to a time-limited COVID-19 contingency fund, aiming to maintain flexibility to deal with uncertainty related to the pandemic. Ontario is one of the world’s largest sub-sovereign borrowers and is the largest issuer of Canadian dollar green bonds. As of Aug. 4, it had completed C$21.0 billion, or 40%, of its C$53.0 billion 2021–2022 long-term borrowing program, according to the update. Last month, it issued a C$2.75 billion green bond, the largest of its kind ever issued in Canada. The yield on Ontario’s 10-year bond was little changed at 1.774%, trading about 50.5 basis points above the yield on Canadian government debt. ($1 = 1.2519 Canadian dollars) (Reporting by Fergal Smith Editing by Chizu Nomiyama and Paul Simao)