Not surprisingly, the Trudeau government’s chief financial officer, Chrystia Freeland, has been forced to revise upward the enormous federal debt that all Canadians must bear by the sweat of their brow. Compared to the budget from March last year, additional spending of 59 billion euros was made for the five financial years up to 2027-2028.
• Also read: $13.2 billion in new spending over six years: A return to a balanced budget is not in sight in the current federal economic report
In her financial and budget update report presented yesterday, the Finance Minister expects the federal debt to reach $1,344 billion at the end of the 2027/28 fiscal year, $31.3 billion more than forecast in March last year.
At the end of this 2023/24 fiscal year, Minister Freeland forecasts that federal debt will end the year at $1,216 billion. That means that four fiscal years later, at the end of 2027-28, the federal debt will have increased by $128 billion.
To show you how deeply indebted the federal government was under Justin Trudeau’s Liberal government, let me remind you that at the end of the 2019 fiscal year, the federal debt was “only” $721 billion. 20.
The national debt will therefore have increased by $495 billion over the last four years.
Important side note: In defense of Justin Trudeau’s government, it’s worth noting that the big boom in federal debt is due to the hundreds of billions of dollars the federal government has pumped into the pockets of millions of Canadian COVID-19 victims, in addition to tens of thousands of businesses hurt financially during the damn COVID outbreak.
Despite the size of the federal debt, Minister Chrystia Freeland wants to reassure Canadians by pointing out that the debt has by no means reached catastrophic levels. As a percentage, federal debt is 42.4% of Canada’s nominal GDP. This puts Canada in a good position compared to other large industrialized countries.
EXPLOSION IN INTEREST COSTS
Anyone who says high debt means high interest costs.
The federal government may be financing itself at interest rates significantly lower than ordinary borrowers and businesses, but the fact remains that the interest costs of servicing its debt have literally exploded since the Bank of Canada’s base rate rose from 0.5% (in March 2022). today 5.0%.
The federal public debt will represent a total burden of $266 billion for the five fiscal years from 2023-24 to 2027-28. That is 31 billion more in interest costs than the cost level forecast by Minister Freeland last March.
In the 2021/22 financial year, just before interest rates rose, public debt burdens amounted to $24.9 billion.
In this fiscal year 2023/24 they will reach 46.5 billion. And in 2027-28, federal debt burdens are expected to exceed $58 billion.
If it turns out that interest costs alone account for a little more than 10% of the federal government’s total expenditure, this amounts to a waste of public resources.
