Government Debt - Knowledge
Understanding the Facts
Canadian government debt was mentioned in Symptoms recently. Let’s take a two-part look at our debt by first building our Knowledge, then looking at its Impact.
Basics
Government debt discussion is typically centered around the Debt to GDP ratio, taking our total debt and dividing it by our total Gross Domestic Product. The International Monetary Fund (IMF) definition for country comparisons uses gross (total) general (includes federal & provincial/territories & local governments) debt. (1) This includes all the debts we are required to pay principal and/or interest on. Canada’s gross general government debt is 108% of its GDP.
In total dollars, our debt is CAD $3.2 Trillion. $3,200,000,000,000.00.
Comparisons
Many will be used to hearing the federal government tout ‘best in the G7’ but that is misleading. Why? Unlike most countries, our provinces also have large debts. It’s naïve to not consider them in comparisons. Thus, ‘best in the G7’ is an apples-to-oranges measurement of only modified net federal debt/GDP (ours is 69%) against other countries’ gross general debt/GDP. (2)
Using the IMF comparison, 108% places us 33rd (6th worst) among 38 advanced economies. 26 of the 38 nations are below 70%. (1) (3)
Referencing Canadian history since 1870, our debt is higher than the 1990’s debt crisis, higher than WW1 and below only some of the WW2 years. (5)
Federal and Provincial
The Federal government is 53% of our total gross general debt, while province-territory-local combine for 47%. (4) (2022 data, gross). 1960-2020 net debt/GDP (A):
· Federal ±50% mean, ranging from 35% to 75%
· Provincial starting under 20% and trending up to over 50%
Provinces are most of the non-federal portion and are growing as a % of GDP over the last six decades while federal debt is relatively consistent within a range. (5)
There is a substantial difference between provinces. Debt/GDP is highest in NL, QC and ON (at 37-42% net debt/GDP), double levels in the lowest provinces being AB, SK and BC (at 9-19% net debt/GDP). (6)
Deficits
Our long-term debt burden comes from running deficits year after year. Looking at the federal government, a revenue of $460 billion and expense of $521 billion delivered taxpayers another $61 billion deficit (2% of GDP) last year. (7)
Can we turn away from deficits back to surplus or at least balance? It seems unlikely. Even if we stop all new incremental spending on healthcare, education, social service, security, and infrastructure, we still must spend more on national defense. The 2025 defense estimate is $41 billion (1.4% of GDP) per year. The Parliamentary Budget Office suggests $82 Billion (inflation adjusted) per year by 2032 to achieve the 2% goal. (8)
That’s tens of billions more annually on an already $61 billion per year deficit!
Further, the NATO meeting this summer is expected to move the target up to 3.5% or even maybe 5%, according to Scott Clancy, retired RCAF Major-General and NORAD director. (9)
Next
Knowledge is the best way to Be Prepared.
The next Government Debt blog will address the impact of government debt on our lives.
Note A: 2024 data used unless noted otherwise. The blog switches from gross to net debt when discussing provinces, due to data availability.
Note B: This blog is my best attempt to take nerd-level financial data and boil it into some basic facts we can use as reference points to discuss government debt. Sorry if I bored you senseless and/or ran too long.
1. https://www.imf.org/external/datamapper/GG_DEBT_GDP@GDD/SWE
2. https://www.fraserinstitute.org/studies/caution-required-when-comparing-canadas-debt-other-countries
4. https://en.wikipedia.org/wiki/Canadian_public_debt#External_links
5. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.trevortombe.com/files/tombe_CTJ_debt.pdf
6. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.fraserinstitute.org/sites/default/files/growing-debt-burden-for-canadians-2024.pdf
7. https://www.canada.ca/en/department-finance/services/publications/annual-financial-report/2024.html
9. The Line Podcast, On The Line, May 27, 2025