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Canadian public debt
Canadian public debt, or general government debt, is the liabilities of the government sector. Government gross debt consists of liabilities that are a financial claim that requires payment of interest and/or principal in future. They consist mainly of Treasury bonds, but also include public service employee pension liabilities. Changes in debt arise primarily from new borrowing, due to government expenditures exceeding revenues.
For 2021 (the fiscal year ending 31 March 2022), the market value of gross debt was $2,942 billion ($76,135 per capita) for the consolidated Canadian general government – federal, plus provincial, territorial and local governments (PTLGs) combined. As a ratio of GDP, gross debt was 117.2% (GDP was $2,510 billion in 2021), down from 130.0% in 2020, the highest level ever recorded, but significantly above the pre-pandemic level (105.6% in 2019).
The sustainability of government debt depends on sound fiscal management by the provincial, territorial and local governments (PTLGs), given that Canada is one of the world's most decentralized federations. Approximately half of Canadian general government gross debt in 2021 was debt of the federal (central) government ($1,570 billion or 62.5% of GDP), and half was debt of the PTLGs. Public debt is sustainable when it "does not grow continuously as a share of the economy". While the federal government's fiscal strategy was assessed as sustainable over the long-term, this was not the case for the subnational sector as a whole, according to a 2022 Parliamentary Budget Officer report.
General government net debt, or gross debt minus financial assets, reached $1,453 billion or 57.9% as a share of GDP in the fiscal year ending 31 March 2022. This is down from 70.7% the year previously. Federal government net debt, at $910 billion, or 36.3% of GDP, was above the pre-pandemic level, but was down from 42.7% of GDP in the previous year.
As of March 2022, Canada's DBRS AAA federal credit rating was maintained.
Commonly used government debt terms are gross debt, net debt, and debt securities liabilities. These measures are often presented as a share of GDP, as in the table below, to gauge the size of debt relative to the size of the economy. The debt-to-GDP ratio is a key indicator of the sustainability of government finance, according to the OECD.
Gross debt, also called "total debt", consists of all liabilities that require payment of principal or interest at some point in the future. Gross debt is the commonly used measure of debt in international comparisons by the IMF and the OECD.
Net Debt is gross debt minus financial assets. It takes into account the financial assets governments hold, such as investments to cover the liabilities associated with civil servants' (government employee) pension plans. An issue with calculating net debt is that some government assets are difficult to value. Examples of difficult-to-value assets include nonmarketable equity investments, and loans that might never be repaid if the loan-receiving firms become insolvent. Another issue with net debt is which government assets should be included. The Department of Finance's method to calculate net debt has been criticized for including the assets (but not the liabilities) of the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP). Yakabuski and Clemens and Palacios argue that the Department of Finance methodology understates net debt, since CPP and QPP assets are set aside to pay for future public retirement plan benefits, so they are not available to also pay down government debt.
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Canadian public debt
Canadian public debt, or general government debt, is the liabilities of the government sector. Government gross debt consists of liabilities that are a financial claim that requires payment of interest and/or principal in future. They consist mainly of Treasury bonds, but also include public service employee pension liabilities. Changes in debt arise primarily from new borrowing, due to government expenditures exceeding revenues.
For 2021 (the fiscal year ending 31 March 2022), the market value of gross debt was $2,942 billion ($76,135 per capita) for the consolidated Canadian general government – federal, plus provincial, territorial and local governments (PTLGs) combined. As a ratio of GDP, gross debt was 117.2% (GDP was $2,510 billion in 2021), down from 130.0% in 2020, the highest level ever recorded, but significantly above the pre-pandemic level (105.6% in 2019).
The sustainability of government debt depends on sound fiscal management by the provincial, territorial and local governments (PTLGs), given that Canada is one of the world's most decentralized federations. Approximately half of Canadian general government gross debt in 2021 was debt of the federal (central) government ($1,570 billion or 62.5% of GDP), and half was debt of the PTLGs. Public debt is sustainable when it "does not grow continuously as a share of the economy". While the federal government's fiscal strategy was assessed as sustainable over the long-term, this was not the case for the subnational sector as a whole, according to a 2022 Parliamentary Budget Officer report.
General government net debt, or gross debt minus financial assets, reached $1,453 billion or 57.9% as a share of GDP in the fiscal year ending 31 March 2022. This is down from 70.7% the year previously. Federal government net debt, at $910 billion, or 36.3% of GDP, was above the pre-pandemic level, but was down from 42.7% of GDP in the previous year.
As of March 2022, Canada's DBRS AAA federal credit rating was maintained.
Commonly used government debt terms are gross debt, net debt, and debt securities liabilities. These measures are often presented as a share of GDP, as in the table below, to gauge the size of debt relative to the size of the economy. The debt-to-GDP ratio is a key indicator of the sustainability of government finance, according to the OECD.
Gross debt, also called "total debt", consists of all liabilities that require payment of principal or interest at some point in the future. Gross debt is the commonly used measure of debt in international comparisons by the IMF and the OECD.
Net Debt is gross debt minus financial assets. It takes into account the financial assets governments hold, such as investments to cover the liabilities associated with civil servants' (government employee) pension plans. An issue with calculating net debt is that some government assets are difficult to value. Examples of difficult-to-value assets include nonmarketable equity investments, and loans that might never be repaid if the loan-receiving firms become insolvent. Another issue with net debt is which government assets should be included. The Department of Finance's method to calculate net debt has been criticized for including the assets (but not the liabilities) of the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP). Yakabuski and Clemens and Palacios argue that the Department of Finance methodology understates net debt, since CPP and QPP assets are set aside to pay for future public retirement plan benefits, so they are not available to also pay down government debt.