Unsurprisingly, the Trudeau government’s chief financier, Chrystia Freeland, was forced to revise upwards the enormous federal debt that all Canadians must bear with the sweat of their brow. Compared to last March’s budget, it added 59 billion in additional spending for the five financial years up to 2027-28.
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In her financial and budgetary update presented yesterday, the Minister of Finance expects the federal debt to reach $1,344 billion at the end of the 2027-28 fiscal year, or $31.3 billion more than its forecast from last March.
At the end of this 2023-24 budget year, Minister Freeland predicts that the federal debt will close the year at $1,216 billion. This means that four budget years later, at the end of 2027-28, the federal debt will have increased by $128 billion.
To show you how heavily the federal government fell into debt under the Liberal government of Justin Trudeau, I remind you that the federal debt amounted to “only” $721 billion at the end of the 2019 budget year. 20.
The federal debt will therefore have jumped by $495 billion over the last four years.
Important aside: in defense of Justin Trudeau’s government, the big boom in the federal debt is attributable to the hundreds of billions of dollars that the federal government has injected into the pockets of millions of Canadian victims of COVID-19, in addition to providing relief tens of thousands of businesses financially during the damn COVID outbreak.
Despite the size of the federal debt, Minister Chrystia Freeland wants to reassure Canadians by suggesting that the debt has in no way reached a catastrophic level. As a percentage, the federal debt will amount to 42.4% of Canada’s nominal GDP. This places Canada in a good position compared to other major industrialized countries.
- Listen to the economy segment with Michel Girard via QUB radio :
EXPLOSION OF INTEREST CHARGES
Who says heavy debt, says heavy interest costs.
The federal government may well finance itself at rates that are significantly lower than that of ordinary borrowers and businesses, but the fact remains that the interest costs of its debt service have literally exploded since the key rate of the Bank of Canada went from 0.5% (in March 2022) to 5.0% today.
Federal public debt charges will represent a total bill of $266 billion for the five budget years from the current (2023-24) to 2027-28. This is 31 billion more in interest costs than the amount of costs forecast by Minister Freeland last March.
Archive photo, AFP
In the 2021-22 fiscal year, just before the surge in interest rates, federal public debt charges amounted to $24.9 billion.
In this budget year 2023-24, they will reach 46.5 billion. And in 2027-28, federal debt charges are expected to exceed $58 billion.
When it turns out that interest costs alone take up a little more than 10% of the federal government’s total spending, it borders on a waste of public funds.
