TORONTO, Aug 12 (Reuters) - Ontario, Canada’s most populous province, on Thursday projected a smaller budget deficit for the current fiscal year as rising vaccinations 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 2021-22 fiscal year, compared to a C$33.1 billion deficit seen in a budget in March. The fiscal year began on April 1. ($1 = 1.2519 Canadian dollars) (Reporting by Fergal Smith Editing by Chizu Nomiyama)