Projections of Federal Fiscal Sustainability in Canada

The planned levels of deficits and debt in the latest budgets of the federal and four provincial governments are reasonable projections for the years to FY 2023-24, if governments actually adhere to the spending and revenue plans laid out in those budgets.

Whether these fiscal plans are sustainable over the medium term is clearly questionable for all governments, especially for the federal government. In this supplement to the Bennett Jones Spring 2021 Economic Outlook, we examine the fiscal sustainability issue for the federal government in detail against two key criteria:

  1. The debt/GDP ratio should be on a clear downward track over time based on prudent assumptions for future productivity and labour force growth, and for future interest rates which determine costs of debt service.
  2. Annual program spending should be restrained so that the projected ratio of debt service…

Read more…

Share.

Comments are closed.