The cost of servicing the Canadian federal government's debt has jumped from $20 billion in 2020-21 to an expected $46 billion in 2022-23.
Canada's debt charges are ballooning as Freeland tables a gloomy fall economic statement | CBC News | John Paul Tasker [stress added]:
November 21, 2023 - "The cost to service the federal government's sizeable debt load will spike in the years ahead — and those public debt charges will eat up much more of Ottawa's revenue than they have in recent years, according to Finance Minister Chrystia Freeland's fall economic statement, tabled today. Freeland's document suggests Canada will avoid a recession but predicts economic growth will slow to a crawl....
"Freeland wants to spend about $20.8 billion more over the next six years than the federal government initially projected. Freeland is pitching the increase as smaller than in years' past and as a sign of fiscal prudence....
"The federal Liberal government has run a deficit every year since it was elected. It posted even bigger deficits during the COVID-19 pandemic.... Now, with interest rates at a 20-year high, the cost to borrow all that money has spiked from $20.3 billion in 2020-21 to $46.5 billion in this fiscal year. The debt service charges will march even higher in the years ahead. Carrying the debt is expected to cost the federal treasury $60.7 billion in 2028-29, according to the economic statement....
"To put that in perspective, Ottawa will spend $28.9 billion on the Canadian Armed Forces this fiscal year — about $18 billion less than what the government will send in payments to the banks and bondholders carrying Canada's debt.
"The government's debt costs this year are $20 billion higher than the sum it has earmarked for one of its signature policies — the Canada Child Benefit, which sends cheques to families with kids. The debt charges are also more than double what the employment insurance (EI) program will cost Ottawa this year....
"Kevin Page, the former parliamentary budget officer, said it was 'inevitable' that debt servicing costs would rise once the government decided to backstop the entire economy during the pandemic. 'There was an enormous increase in debt. There were really massive increases in debt. Now it's going to come back to bite us,' he told CBC News.
"The federal debt has doubled from $619.3 billion in 2015-16, the first year of Trudeau's government, to $1.2 trillion last year. It's expected to climb to $1.4 trillion by 2028-29.... The deficit for this fiscal year is projected to be $40 billion — almost exactly what Freeland said it would be in the spring budget.... The deficit for 2024-25 is now expected to be $38.4 billion — $38.3 billion in the year after and $27.1 billion in 2026-27....
"The government says it doesn't expect to post a balanced budget for the foreseeable future."
Read more: https://www.cbc.ca/news/politics/canada-fall-economic-statmenet-2023-1.7035098
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