In the first nine months of the current fiscal year, from April to December 2023, the interest bill on federal debt has already exceeded $35 billion.
At the rate at which interest is accumulating, or even at a rate of 4 billion per month, the federal debt bill is expected to reach 47 billion by the end of this fiscal year 2023-24, or 22 billion more than in fiscal year 2021 /22 year.
We're talking about an interest bill that will be almost double what it was two years ago, just before the Bank of Canada began tightening monetary policy.
This means that the sole impact of the Bank of Canada's spectacular interest rate increase on the federal debt will cost us the astronomical sum of $22 billion in additional interest costs this fiscal year. This will of course also be the case in the next financial years 2024-25, 2025-26 etc.
No, but what a waste of public money!
- Listen to the economy part with Michel Girard above QUB :
TRUDEAU'S MISTAKE?
They will tell me that it is Justin Trudeau's fault, with the numerous and costly measures he has proposed to financially help victims of the COVID-19 pandemic.
A caveat is necessary: almost all Canadians benefited from these measures, which required an outlay of hundreds of billions of dollars.
Yes, the federal debt has increased enormously as a result of the implementation of this package of measures. Today it has reached almost 1,200 billion dollars.
OR AT THE BANK OF CANADA?
In order to counteract inflation in the wake of the COVID-19 pandemic, central banks have resorted to their favorite tool: tightening their respective monetary policies. Apparently, the Bank of Canada followed the example of the US Federal Reserve and other central banks and drastically increased its key interest rate.
This rose from 0.25% in early March 2022 to 5.0% 16 months later, in July 2023. This caused interest costs on all loans, from individuals, companies and governments, to explode.
- Listen to the economy part with Michel Girard above QUB :
The Trudeau government must now finance the federal debt at an interest rate that is at least double what it was before March 2022.
When Tiff Macklem, the governor of the Bank of Canada, says he will have difficulty bringing down inflation if governments do not control their spending, I want to remind him that he himself is responsible for the acute inflation that is caused by the rising interest costs are caused.
At the federal level alone, the increase in the key interest rate costs us an additional 22 billion in interest costs every year. In addition, there are billions of dollars in additional interest costs that provincial governments have to pay on their debts.
And to think that these tens of billions of additional dollars only serve to fill the coffers of bankers and investors!