Its amusing that you think you are credible.
You would fail high school science.
Liberals applauded hefty carbon tax for a farmer
- Thread starter oil&gas
- Start date
You would fail high school science.
The right wingers who are also Climate Change Deniers really moan and groan about the Debt to GDP ratio, although Canada has one of the lowest among the G7 Nations. Only Japan has a lower inflation than Canada. But, but, but, but let us look at Japan's Debt to GDP ratio, which is around 264%:
tradingeconomics.com
Now let's look at the inflation rate of the G7 Nations:
www.expatriatehealthcare.com
So what explanation have these right wingers and all their media got to say to dispute these real facts?
The other nonsense is about how high the Government spending is with the Liberal Government. But, but, but, but once again just look at the Blue Line in the Graph of the Gross Government Debt among the G7 Nations:
www.statista.com
Yes, the lowest among all the G7 Nations. Let us relate it to the Debt to GDP Ratio:
datasetsearch.research.google.com
Enough said as these are the real facts!!
Japan General Government Gross Debt to GDP
Japan recorded a Government Debt to GDP of 255.20 percent of the country's Gross Domestic Product in 2023. This page provides the latest reported value for - Japan Government Debt to GDP - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic...
tradingeconomics.com
Now let's look at the inflation rate of the G7 Nations:
Which G7 Economy Has the Highest Inflation in 2023? - Expatriate Group
Discover which G7 countries have had the highest and the lowest inflation rates in 2023. Get working abroad travel insurance from Expatriate Group.
www.expatriatehealthcare.com
So what explanation have these right wingers and all their media got to say to dispute these real facts?
The other nonsense is about how high the Government spending is with the Liberal Government. But, but, but, but once again just look at the Blue Line in the Graph of the Gross Government Debt among the G7 Nations:
Gross government debt in G7 2023 | Statista
In 2023, the United States had the highest gross government debt of any G7 country, amounting to an estimated 33 trillion U.S.
www.statista.com
Yes, the lowest among all the G7 Nations. Let us relate it to the Debt to GDP Ratio:
Dataset Search
datasetsearch.research.google.com
Enough said as these are the real facts!!
How about comparing our government debt to what it was in 2014?
The right wingers who are also Climate Change Deniers really moan and groan about the Debt to GDP ratio, although Canada has one of the lowest among the G7 Nations. Only Japan has a lower inflation than Canada. But, but, but, but let us look at Japan's Debt to GDP ratio, which is around 264%:
View attachment 285150
Japan General Government Gross Debt to GDP
Japan recorded a Government Debt to GDP of 255.20 percent of the country's Gross Domestic Product in 2023. This page provides the latest reported value for - Japan Government Debt to GDP - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic...
Now let's look at the inflation rate of the G7 Nations:
Which G7 Economy Has the Highest Inflation in 2023? - Expatriate Group
Discover which G7 countries have had the highest and the lowest inflation rates in 2023. Get working abroad travel insurance from Expatriate Group.
So what explanation have these right wingers and all their media got to say to dispute these real facts?
The other nonsense is about how high the Government spending is with the Liberal Government. But, but, but, but once again just look at the Blue Line in the Graph of the Gross Government Debt among the G7 Nations:
Gross government debt in G7 2023 | Statista
In 2023, the United States had the highest gross government debt of any G7 country, amounting to an estimated 33 trillion U.S.
Yes, the lowest among all the G7 Nations. Let us relate it to the Debt to GDP Ratio:
Dataset Search
Enough said as these are the real facts!!
Trudeau points to misleading debt rankings to justify federal debt explosion
Nov 23, 2023
According to the Trudeau government fall economic update released Tuesday, the government will spend nearly $500 billion on programs and debt interest this year and run a deficit of $40 billion.
By 2027-28, the government expects to rack up $271 billion more in total debt than originally forecasted in its spring budget, continuing the reckless debt accumulation that has helped define this government’s fiscal policy.
Yet Prime Minister Justin Trudeau insists his government has “a responsible fiscal track,” again claiming that Canada has the lowest net debt-to-GDP ratio among G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States).
Indeed, data from the International Monetary Fund (IMF) shows Canada has the lowest net debt-to-GDP ratio – a measure that compares debt to the size of the national economy – in the G7. Extending the analysis to a broader set of 33 developed countries yields a similar result, as Canada’s net debt ranks sixth lowest at 14.6 per cent of GDP.
But there’s a problem with using net debt to compare our indebtedness with other countries.
To calculate net debt, you subtract a government’s financial assets from its total (gross) debt, with the implicit assumption that those assets could be used to offset debt. But the financial assets used to calculate Canada’s net debt include the Canada and Quebec pension plans (CPP and QPP).
Assets in the CPP and QPP are needed to provide pensions for
current and future retirees in Canada. Therefore, Canadian governments cannot presumably draw from these assets to offset government debt without compromising the plans’ ability to meet obligations to pensioners. This means Canada’s net debt understates its indebtedness – a problem not faced by other countries.
Net assets in the CPP and QPP totalled roughly $699 billion in mid-2023, while according to the IMF, the difference between Canada’s gross debt and net debt will be roughly $2.6 trillion by the end of 2023, which means that more than one-quarter of the difference between Canada’s gross and net debt is due to the CPP and QPP.
That said, a better measure of Canada’s indebtedness, compared to other countries, is to compare gross general government debt to GDP. According to the IMF, gross debt includes “all liabilities that require future payment of interest
and/or principle by the debtor to the creditor.” For Canada, a federal country where provinces have important constitutional powers and spend significantly, it’s important to use general government debt (i.e. gross debt of all levels of government) as a measure.
When comparing Canada’s gross general government debt-to-GDP with the same developed countries, Canada falls to 27 out of 33. This is a 21-position decline in ranking from Canada’s sixth-place standing when simply measuring net debt-to-GDP. At 106 per cent of GDP, Canada’s gross debt is also higher than debt levels in Germany and the U.K., meaning Canada doesn’t rank best among G7 countries.
The Trudeau government has typically justified its borrowing by referencing Canada’s low level of indebtedness relative to other developed countries. This is misleading, and in reality, Canada’s government debt is high relative to other comparable countries.
biv.com
Nov 23, 2023
According to the Trudeau government fall economic update released Tuesday, the government will spend nearly $500 billion on programs and debt interest this year and run a deficit of $40 billion.
By 2027-28, the government expects to rack up $271 billion more in total debt than originally forecasted in its spring budget, continuing the reckless debt accumulation that has helped define this government’s fiscal policy.
Yet Prime Minister Justin Trudeau insists his government has “a responsible fiscal track,” again claiming that Canada has the lowest net debt-to-GDP ratio among G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States).
Indeed, data from the International Monetary Fund (IMF) shows Canada has the lowest net debt-to-GDP ratio – a measure that compares debt to the size of the national economy – in the G7. Extending the analysis to a broader set of 33 developed countries yields a similar result, as Canada’s net debt ranks sixth lowest at 14.6 per cent of GDP.
But there’s a problem with using net debt to compare our indebtedness with other countries.
To calculate net debt, you subtract a government’s financial assets from its total (gross) debt, with the implicit assumption that those assets could be used to offset debt. But the financial assets used to calculate Canada’s net debt include the Canada and Quebec pension plans (CPP and QPP).
Assets in the CPP and QPP are needed to provide pensions for
current and future retirees in Canada. Therefore, Canadian governments cannot presumably draw from these assets to offset government debt without compromising the plans’ ability to meet obligations to pensioners. This means Canada’s net debt understates its indebtedness – a problem not faced by other countries.
Net assets in the CPP and QPP totalled roughly $699 billion in mid-2023, while according to the IMF, the difference between Canada’s gross debt and net debt will be roughly $2.6 trillion by the end of 2023, which means that more than one-quarter of the difference between Canada’s gross and net debt is due to the CPP and QPP.
That said, a better measure of Canada’s indebtedness, compared to other countries, is to compare gross general government debt to GDP. According to the IMF, gross debt includes “all liabilities that require future payment of interest
and/or principle by the debtor to the creditor.” For Canada, a federal country where provinces have important constitutional powers and spend significantly, it’s important to use general government debt (i.e. gross debt of all levels of government) as a measure.
When comparing Canada’s gross general government debt-to-GDP with the same developed countries, Canada falls to 27 out of 33. This is a 21-position decline in ranking from Canada’s sixth-place standing when simply measuring net debt-to-GDP. At 106 per cent of GDP, Canada’s gross debt is also higher than debt levels in Germany and the U.K., meaning Canada doesn’t rank best among G7 countries.
The Trudeau government has typically justified its borrowing by referencing Canada’s low level of indebtedness relative to other developed countries. This is misleading, and in reality, Canada’s government debt is high relative to other comparable countries.
Opinion: Trudeau points to misleading debt rankings to justify federal debt explosion
'Reckless debt accumulation' defines the current Ottawa administration, write Fraser Institute analysts
biv.com
Think what good a fraction of expenses on servicing ballooning
government debt could have done.
-------------------------------------------------------------------------------------------------------------------
Higher cost of servicing debt putting Canadian government in a bind
Sept 02, 2023
In the fall of 2020, Finance Minister Chrystia Freeland gave a speech outlining Ottawa’s approach to debt management during the COVID-19 pandemic.
Yes, the federal government was borrowing unprecedented sums of money to fund pandemic support programs. But the risk to the country’s fiscal health remained limited, Ms. Freeland argued in her first major address as minister.
With interest rates at rock bottom, the cost of servicing the mounting pile of debt was at a historic low. Looking forward, “deflation and subpar growth” seemed to pose a greater risk than the “twin threats of inflation and spiralling debt,” she told the virtual audience.
Three years on, this argument has been flipped on its head. Instead of remaining quiescent, inflation surged in 2021 and 2022, prompting the Bank of Canada to raise interest rates at the fastest pace in a generation.
Yields on Government of Canada bonds are now at the highest level since 2007, making it more expensive for the government to borrow new money and refinance outstanding debt. A growing number of economists – including Bank of Canada Governor Tiff Macklem – are speculating that the global economy is entering a period of structurally higher borrowing costs compared with the period before the pandemic.
This macroeconomic shift has left federal and provincial policy makers in a tricky spot. Having greatly expanded their debt loads during the pandemic, governments face higher interest costs as that debt rolls over.
The federal government expects to spend $43.9-billion on interest payments this fiscal year, up from $24.5-billion two years ago, according to its 2023-24 budget. The actual number could well come in higher, as bond yields have risen further since the budget was published in March.
We’re still a long way from the fiscal crisis of the early 1990s, when the federal government was spending more than 30 cents of every dollar it collected on interest payments. The budget projects an interest expense-to-revenue ratio of around 9 per cent in the coming years. That’s up from an average of 7 per cent in the five years before the pandemic, but still low by historical standards.
Nonetheless, the step-up in debt servicing costs has real implications for fiscal flexibility. Billions of additional dollars spent on interest payments means less money for other government priorities, especially if the economy slows and government revenues decline, as is widely expected. Higher interest rates also make it harder to justify borrowing new money for public-sector investments – a tough pill to swallow for a federal government with a penchant for deficits.
In recent decades, governments have benefited from benign fiscal arithmetic. Because economic growth rates exceeded interest rates paid on debt, interest costs remained manageable even as the overall debt load ballooned.
Today, this math is less forgiving. There’s a good chance that interest rates will exceed economic growth rates in the short to medium term, according to former Bank of Canada governor David Dodge. And that state of affairs has both economic and political consequences.
“As long as governments appear to be delivering services commensurate with what they’re taking from people in terms of taxation, then basically things are okay,” Mr. Dodge, who also served as deputy finance minister during the deficit-cutting 1990s, said in an interview.
“The one thing that people don’t give governments any credit for is servicing a past debt. So as that zero-credit component eats up more and more of the revenue stream you’re taking in, the government becomes less politically sustainable over time.”
The surge in interest rates caught both Ottawa and Bay Street by surprise.
In early 2022, the Department of Finance polled a group of private-sector economists to come up with a forecast for the spring budget. The economists expected the yield on three-month treasury bills to average 0.8 per cent that year, and the yield on 10-year Government of Canada bonds to average 2 per cent.
The Bank of Canada had other ideas. Caught off guard by inflation, the central bank began raising rates at the fastest pace in decades, lifting the overnight rate and pushing up interest rates across the yield curve. By the end of 2022, the yield on three-month T-bills was above 4 per cent and the yield on 10-year bonds had reached 3.5 per cent – levels not seen since before the 2008-09 global financial crisis.
This lightning-fast adjustment took a chunk out of the federal budget. The government had projected roughly $27-billion in debt charges for 2022-23; the actual number came in around $35-billion. The 2023-24 budget, released in March, sees annual debt charges rising to $50-billion by 2027-28.
Bond yields have continued pressing higher in recent months, spurred on by two additional rate hikes from the Bank of Canada this summer, and a growing sense among market participants that Mr. Macklem and his colleagues at other major central banks intend to keep interest rates “higher for longer” to get control of stubborn inflation.
That suggests public debt costs could once again exceed the budget projection. The Department of Finance estimates a one percentage point rise in interest rates increases debt charges by $3.8-billion in the first year, rising to $10.3-billion by Year 5. The actual impact on the budget is somewhat offset by a decline in the government’s pension liabilities, which fall when interest rates rise, and an increase in revenues from interest-bearing assets.
Public debt charges in June were $1.3-billion higher than the same month a year ago, an increase of 55 per cent, according to the latest Fiscal Monitor, published by the Department of Finance.
“The big question right now is, over the medium term, where does that neutral interest rate lie or where does that long-term 10-year rate lie?” said Rebekah Young, Bank of Nova Scotia’s head of inclusion and resilience economics. The neutral rate is a theoretical level for the Bank of Canada’s policy rate that neither stimulates nor holds back the economy.
So far, there are few signs that higher debt costs are constraining fiscal decision making, Ms. Young said. After all, interest payments remain small relative to the size of the economy, clocking in at 1.6 per cent of gross domestic product this year, up from around 1 per cent before the pandemic, but well below the 4 per cent to 6 per cent range seen in the 1980s and 1990s.
That said, if the actual dollar amount being gobbled up by interest payments gets too big, it could have “political economy considerations,” she said.
“Even if it’s not a runaway trajectory of debt servicing, either as a share of GDP or as a share of revenues, you can start seeing it as the cost of a dental program, or a whole new program,” Ms. Young said.
“From an economic point of view, that shouldn’t influence things. But public perception can tip when they start to see these bigger and bigger numbers and the opportunity cost that comes with that.”
Credit rating agencies, which help determine how much governments pay to access financial markets, remain fairly upbeat about the situation.
Fitch Ratings Inc. downgraded the federal government’s debt from AAA to AA+ in the summer of 2020 in response to the swelling deficit. But the other two big ratings agencies, S&P Global Ratings and Moody’s Investors Service, have retained their top credit ratings for Canada. Most provincial ratings remain intact, with a few exceptions, such as British Columbia, which S&P downgraded earlier this year.
Bhavini Patel, a director and lead analyst with S&P, pointed to several factors that are moderating the impact of rising interest rates.
Economic growth has been surprisingly strong over the past two years, lowering debt-to-GDP
ratios for governments and filling coffers with tax revenue. This has allowed federal and provincial governments to run smaller deficits than anticipated and issue less new debt, Ms. Patel said.
There’s also a mechanical issue: Only a portion of government debt matures and needs to be refinanced each year. That slows the pass-through of higher interest rates to higher interest payments. The average term to maturity (ATM) for federal debt is around 7½ years, while the ATM on provincial debt ranges from 10 to 12 years.
“We’re only seeing about one-10th of the total portfolio roll over in any given year,” Ms. Patel said of the provinces. “So the impact of higher debt [servicing costs] is more of a medium-term risk than one that we’re seeing in the short term.”
Michael Yake, Canada country manager for Moody’s, echoed this sentiment about stronger-than-expected growth and higher tax receipts.
“The starting point is good,” Mr. Yake said. “Now it really just depends on how long this current
[interest rate] environment lasts. The provinces and Canada can withstand a few years without material credit pressure. But if they do start rolling over, and the majority of their debt starts having these higher interest rates, then we’re going to see that impact.”
Governments did reduce some of this rollover risk by issuing more long-term bonds during the pandemic.
In the fall of 2020, the federal government began issuing far more 10-year and 30-year bonds. This was partly to lock in low interest rates, and partly to lengthen out the ATM of federal debt, which had fallen from 7½ years to five years early in the pandemic, as the government funded its emergency spending with short-term T-bills.
University of British Columbia economics professor Kevin Milligan worked as a special adviser to the federal government in 2020 and 2021. He said there was considerable debate at the time about whether more should be done to lock in ultralow interest rates.
“There was certainly a view professed by some: Shove those long bonds out until we see [the
market] choke on it. Others were more cautious,” Prof. Milligan said.
At the peak in fiscal 2021-22, 45 per cent of new bonds issued by the federal government had terms longer than 10 years, up from a pre-pandemic average of around 20 per cent. Prof. Milligan still isn’t sure this went far enough.
“When the interest rate is low, you should be locking in an awful lot of long-run term interest rates until you see the whites of their eyes. And it’s not clear to me that we saw the whites of their eyes,” he said.
The Department of Finance ended its bias toward long-term bonds earlier this year, moving back to a more balanced approach to issuing debt. It also began tweaking around the edges of its debt management strategy, in an apparent attempt to eke out savings. It stopped issuing real return bonds, which cost the government more as inflation increases. And it’s currently contemplating rolling the Canada Mortgage Bond program into general government borrowing.
To hear the federal government talk, debt management remains on an even keel. The 2023-24 budget projects the debt-to-GDP ratio will tick up slightly next year straining the government’s promise to keep the ratio on a downward slope over the medium term – its “fiscal anchor.” But Ms. Freeland maintains the fiscal anchor is sound and the current path is sustainable.
“As recent data shows, demand for Aaa Canadian bonds is high – including against U.S. Treasuries. This is positive for Canada,” Finance Department spokesperson Jessica Eritou said in an e-mail, responding to questions about how the government’s debt-management strategy has changed with higher interest rates.
But the rapid rise in debt costs should give Ms. Freeland and her team pause, according to Mr. Dodge. In a paper published earlier this year, the former central banker warned that governments run into trouble when they start spending more than 10 per cent of their revenue on interest payments. We’re not there yet, Mr. Dodge wrote. But some combination of slower economic growth, deficit spending and persistently high interest rates could easily push the ratio above that threshold in the coming years.
Robert Asselin, senior vice-president of policy at the Business Council of Canada, who co-wrote the paper with Mr. Dodge, said that a rising debt service ratio doesn’t mean debts are about to spiral out of control, as they did in the 1990s.
But it could mean that policy makers will be forced to make increasingly hard decisions about cutting spending or increasing taxes.
“It’s not a question that tomorrow Canada won’t be able to sell its bonds or market. It’s more a question of are we putting ourselves in a bad situation where we’re eventually going to have to make really difficult choices,” he said.
www.theglobeandmail.com
government debt could have done.
-------------------------------------------------------------------------------------------------------------------
Higher cost of servicing debt putting Canadian government in a bind
Sept 02, 2023
In the fall of 2020, Finance Minister Chrystia Freeland gave a speech outlining Ottawa’s approach to debt management during the COVID-19 pandemic.
Yes, the federal government was borrowing unprecedented sums of money to fund pandemic support programs. But the risk to the country’s fiscal health remained limited, Ms. Freeland argued in her first major address as minister.
With interest rates at rock bottom, the cost of servicing the mounting pile of debt was at a historic low. Looking forward, “deflation and subpar growth” seemed to pose a greater risk than the “twin threats of inflation and spiralling debt,” she told the virtual audience.
Three years on, this argument has been flipped on its head. Instead of remaining quiescent, inflation surged in 2021 and 2022, prompting the Bank of Canada to raise interest rates at the fastest pace in a generation.
Yields on Government of Canada bonds are now at the highest level since 2007, making it more expensive for the government to borrow new money and refinance outstanding debt. A growing number of economists – including Bank of Canada Governor Tiff Macklem – are speculating that the global economy is entering a period of structurally higher borrowing costs compared with the period before the pandemic.
This macroeconomic shift has left federal and provincial policy makers in a tricky spot. Having greatly expanded their debt loads during the pandemic, governments face higher interest costs as that debt rolls over.
The federal government expects to spend $43.9-billion on interest payments this fiscal year, up from $24.5-billion two years ago, according to its 2023-24 budget. The actual number could well come in higher, as bond yields have risen further since the budget was published in March.
We’re still a long way from the fiscal crisis of the early 1990s, when the federal government was spending more than 30 cents of every dollar it collected on interest payments. The budget projects an interest expense-to-revenue ratio of around 9 per cent in the coming years. That’s up from an average of 7 per cent in the five years before the pandemic, but still low by historical standards.
Nonetheless, the step-up in debt servicing costs has real implications for fiscal flexibility. Billions of additional dollars spent on interest payments means less money for other government priorities, especially if the economy slows and government revenues decline, as is widely expected. Higher interest rates also make it harder to justify borrowing new money for public-sector investments – a tough pill to swallow for a federal government with a penchant for deficits.
In recent decades, governments have benefited from benign fiscal arithmetic. Because economic growth rates exceeded interest rates paid on debt, interest costs remained manageable even as the overall debt load ballooned.
Today, this math is less forgiving. There’s a good chance that interest rates will exceed economic growth rates in the short to medium term, according to former Bank of Canada governor David Dodge. And that state of affairs has both economic and political consequences.
“As long as governments appear to be delivering services commensurate with what they’re taking from people in terms of taxation, then basically things are okay,” Mr. Dodge, who also served as deputy finance minister during the deficit-cutting 1990s, said in an interview.
“The one thing that people don’t give governments any credit for is servicing a past debt. So as that zero-credit component eats up more and more of the revenue stream you’re taking in, the government becomes less politically sustainable over time.”
The surge in interest rates caught both Ottawa and Bay Street by surprise.
In early 2022, the Department of Finance polled a group of private-sector economists to come up with a forecast for the spring budget. The economists expected the yield on three-month treasury bills to average 0.8 per cent that year, and the yield on 10-year Government of Canada bonds to average 2 per cent.
The Bank of Canada had other ideas. Caught off guard by inflation, the central bank began raising rates at the fastest pace in decades, lifting the overnight rate and pushing up interest rates across the yield curve. By the end of 2022, the yield on three-month T-bills was above 4 per cent and the yield on 10-year bonds had reached 3.5 per cent – levels not seen since before the 2008-09 global financial crisis.
This lightning-fast adjustment took a chunk out of the federal budget. The government had projected roughly $27-billion in debt charges for 2022-23; the actual number came in around $35-billion. The 2023-24 budget, released in March, sees annual debt charges rising to $50-billion by 2027-28.
Bond yields have continued pressing higher in recent months, spurred on by two additional rate hikes from the Bank of Canada this summer, and a growing sense among market participants that Mr. Macklem and his colleagues at other major central banks intend to keep interest rates “higher for longer” to get control of stubborn inflation.
That suggests public debt costs could once again exceed the budget projection. The Department of Finance estimates a one percentage point rise in interest rates increases debt charges by $3.8-billion in the first year, rising to $10.3-billion by Year 5. The actual impact on the budget is somewhat offset by a decline in the government’s pension liabilities, which fall when interest rates rise, and an increase in revenues from interest-bearing assets.
Public debt charges in June were $1.3-billion higher than the same month a year ago, an increase of 55 per cent, according to the latest Fiscal Monitor, published by the Department of Finance.
“The big question right now is, over the medium term, where does that neutral interest rate lie or where does that long-term 10-year rate lie?” said Rebekah Young, Bank of Nova Scotia’s head of inclusion and resilience economics. The neutral rate is a theoretical level for the Bank of Canada’s policy rate that neither stimulates nor holds back the economy.
So far, there are few signs that higher debt costs are constraining fiscal decision making, Ms. Young said. After all, interest payments remain small relative to the size of the economy, clocking in at 1.6 per cent of gross domestic product this year, up from around 1 per cent before the pandemic, but well below the 4 per cent to 6 per cent range seen in the 1980s and 1990s.
That said, if the actual dollar amount being gobbled up by interest payments gets too big, it could have “political economy considerations,” she said.
“Even if it’s not a runaway trajectory of debt servicing, either as a share of GDP or as a share of revenues, you can start seeing it as the cost of a dental program, or a whole new program,” Ms. Young said.
“From an economic point of view, that shouldn’t influence things. But public perception can tip when they start to see these bigger and bigger numbers and the opportunity cost that comes with that.”
Credit rating agencies, which help determine how much governments pay to access financial markets, remain fairly upbeat about the situation.
Fitch Ratings Inc. downgraded the federal government’s debt from AAA to AA+ in the summer of 2020 in response to the swelling deficit. But the other two big ratings agencies, S&P Global Ratings and Moody’s Investors Service, have retained their top credit ratings for Canada. Most provincial ratings remain intact, with a few exceptions, such as British Columbia, which S&P downgraded earlier this year.
Bhavini Patel, a director and lead analyst with S&P, pointed to several factors that are moderating the impact of rising interest rates.
Economic growth has been surprisingly strong over the past two years, lowering debt-to-GDP
ratios for governments and filling coffers with tax revenue. This has allowed federal and provincial governments to run smaller deficits than anticipated and issue less new debt, Ms. Patel said.
There’s also a mechanical issue: Only a portion of government debt matures and needs to be refinanced each year. That slows the pass-through of higher interest rates to higher interest payments. The average term to maturity (ATM) for federal debt is around 7½ years, while the ATM on provincial debt ranges from 10 to 12 years.
“We’re only seeing about one-10th of the total portfolio roll over in any given year,” Ms. Patel said of the provinces. “So the impact of higher debt [servicing costs] is more of a medium-term risk than one that we’re seeing in the short term.”
Michael Yake, Canada country manager for Moody’s, echoed this sentiment about stronger-than-expected growth and higher tax receipts.
“The starting point is good,” Mr. Yake said. “Now it really just depends on how long this current
[interest rate] environment lasts. The provinces and Canada can withstand a few years without material credit pressure. But if they do start rolling over, and the majority of their debt starts having these higher interest rates, then we’re going to see that impact.”
Governments did reduce some of this rollover risk by issuing more long-term bonds during the pandemic.
In the fall of 2020, the federal government began issuing far more 10-year and 30-year bonds. This was partly to lock in low interest rates, and partly to lengthen out the ATM of federal debt, which had fallen from 7½ years to five years early in the pandemic, as the government funded its emergency spending with short-term T-bills.
University of British Columbia economics professor Kevin Milligan worked as a special adviser to the federal government in 2020 and 2021. He said there was considerable debate at the time about whether more should be done to lock in ultralow interest rates.
“There was certainly a view professed by some: Shove those long bonds out until we see [the
market] choke on it. Others were more cautious,” Prof. Milligan said.
At the peak in fiscal 2021-22, 45 per cent of new bonds issued by the federal government had terms longer than 10 years, up from a pre-pandemic average of around 20 per cent. Prof. Milligan still isn’t sure this went far enough.
“When the interest rate is low, you should be locking in an awful lot of long-run term interest rates until you see the whites of their eyes. And it’s not clear to me that we saw the whites of their eyes,” he said.
The Department of Finance ended its bias toward long-term bonds earlier this year, moving back to a more balanced approach to issuing debt. It also began tweaking around the edges of its debt management strategy, in an apparent attempt to eke out savings. It stopped issuing real return bonds, which cost the government more as inflation increases. And it’s currently contemplating rolling the Canada Mortgage Bond program into general government borrowing.
To hear the federal government talk, debt management remains on an even keel. The 2023-24 budget projects the debt-to-GDP ratio will tick up slightly next year straining the government’s promise to keep the ratio on a downward slope over the medium term – its “fiscal anchor.” But Ms. Freeland maintains the fiscal anchor is sound and the current path is sustainable.
“As recent data shows, demand for Aaa Canadian bonds is high – including against U.S. Treasuries. This is positive for Canada,” Finance Department spokesperson Jessica Eritou said in an e-mail, responding to questions about how the government’s debt-management strategy has changed with higher interest rates.
But the rapid rise in debt costs should give Ms. Freeland and her team pause, according to Mr. Dodge. In a paper published earlier this year, the former central banker warned that governments run into trouble when they start spending more than 10 per cent of their revenue on interest payments. We’re not there yet, Mr. Dodge wrote. But some combination of slower economic growth, deficit spending and persistently high interest rates could easily push the ratio above that threshold in the coming years.
Robert Asselin, senior vice-president of policy at the Business Council of Canada, who co-wrote the paper with Mr. Dodge, said that a rising debt service ratio doesn’t mean debts are about to spiral out of control, as they did in the 1990s.
But it could mean that policy makers will be forced to make increasingly hard decisions about cutting spending or increasing taxes.
“It’s not a question that tomorrow Canada won’t be able to sell its bonds or market. It’s more a question of are we putting ourselves in a bad situation where we’re eventually going to have to make really difficult choices,” he said.
Higher cost of servicing debt putting Canadian government in a bind
Yields on Government of Canada bonds are at the highest level since 2007, making it more expensive for the government to borrow new money and refinance outstanding debt
www.theglobeandmail.com
The clueless grade schoolers that have memories of sieves, for example utterly forget or simply don’t know major historical facts like manufacturing losses, caused in part by Hydro rates and ( not unlike Carbon taxes today) brain dead Ontario Liberal policies….. and supported by blind, don’t give a shit about people Liberal voters..The right wingers who are also Climate Change Deniers really moan and groan about the Debt to GDP ratio, although Canada has one of the lowest among the G7 Nations. Only Japan has a lower inflation than Canada. But, but, but, but let us look at Japan's Debt to GDP ratio, which is around 264%:
View attachment 285150
Japan General Government Gross Debt to GDP
Japan recorded a Government Debt to GDP of 255.20 percent of the country's Gross Domestic Product in 2023. This page provides the latest reported value for - Japan Government Debt to GDP - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic...
Now let's look at the inflation rate of the G7 Nations:
Which G7 Economy Has the Highest Inflation in 2023? - Expatriate Group
Discover which G7 countries have had the highest and the lowest inflation rates in 2023. Get working abroad travel insurance from Expatriate Group.
So what explanation have these right wingers and all their media got to say to dispute these real facts?
The other nonsense is about how high the Government spending is with the Liberal Government. But, but, but, but once again just look at the Blue Line in the Graph of the Gross Government Debt among the G7 Nations:
Gross government debt in G7 2023 | Statista
In 2023, the United States had the highest gross government debt of any G7 country, amounting to an estimated 33 trillion U.S.
Yes, the lowest among all the G7 Nations. Let us relate it to the Debt to GDP Ratio:
Dataset Search
Enough said as these are the real facts!!
And or various impacts from 2008…And who think they grasp economics but don’t grasp certain facts or historical facts for example Ontarios impacts on Canadas GDP. Think they are smart (despite the obvious) and keep coming back.
The same dolts also keep thinking comparisons to other G7 countries are all that. As if that’s the be all and end all. In fact said brain dead people can’t grasp that during and after 2008. Canada compared extremely well. Nor does he know why, but more importantly did that stop losses in Ontario Einstein?
Regardless the hard fact is we live in Canada, we vote in Canada, and those who matter. Ratings agencies, businesses, institutional investors, etc don’t give a shit…how clueless do one need to be……well so clueless said dolt can’t even grasp what Capital Bleed( though I’m sure he whined loudly about brain drain back in the day) is and the fact it’s very bad…Nor much more obvious examples of it like manufacturing losses..Hello McFly?
Those same clueless dolts A) swallow bs and spins from Left wing media and politicians no differently than right wing media and politicians and B) think only “right wingers” are dumb, when they can’t even grasp facts and history..nor how to read budgets, nor grasp basic financial terminology or grade school economics.
Beaver is so economically astute is he doesn’t even know what lukewarm jobs growth means, what causes inflation, nor how/why the BoC would raise rates….or what a disaster is. Nor can he grasp that no matter what he tries to spin. He still can’t come to terms with the facts Debt/GDP today is much higher than when Harper left and Trudeau came in. He is so clueless and lost he can’t grasp that if Harper left as disaster…..once again, poor Beaver has no clue what he is saying or believes.
And unless he wants more inflation, and higher rates, a hot economy is a bad thing. He doesn’t know a thing about economics or business cycles either.
Nor can he grasp the peons are hurting, and the vast majority of Canadians are sick of both his Liberals and him. None more so, than Liberals in the GTA who only think of themselves..while compared to everyone else, do have it extremely good…..He doesn’t like facts. He thinks he is smarter than CEOs, economists, and the majority of Canadians.
Maybe that’s why he failed economics and finance.
Last edited:
So why is it that if you are the economically astute person on the board you can't describe the changes that will fix the problem?
So why is it that if you have any brain function, you could not extract the fix to the economic problem as described in his post ?
its pretty clear he believes the first step in the fix is that the liberals have to be voted out
no, if he is waiting, its for the next election
Inflation is political kryptonite for incumbents
This is true, right or wrong, so do not bore us with attempts to deflect blame
The impacts of inflation on the electorate are felt every god damn day.
A relentless reminder their purchasing power and their living standard is being eroded,
A relentless reminder that change is required, reinforced with each purchase they make/ each bill they pay
so they vote for change
It is high time you wake up to the fact your empty suit, corrupt, moron Justin has been a disaster.
It is high time you wake up to the fact he and the liberal party are going to get booted out of office by the electorate
Read this through and let's see if you see the light. If I may add, do so after you calm down. Take a breath, relax and absorb the material.
2023 Open Policy Process | 2023 Liberal National Convention | Liberal Party of Canada
Hearing ideas from Canadians is what keeps our Liberal movement strong, growing, and innovative - and we want you to be a part of it.
2023.liberal.ca
Does the policy process include projection of the federal debt andRead this through and let's see if you see the light. If I may add, do so after you calm down. Take a breath, relax and absorb the material.
2023 Open Policy Process | 2023 Liberal National Convention | Liberal Party of Canada
Hearing ideas from Canadians is what keeps our Liberal movement strong, growing, and innovative - and we want you to be a part of it.
outlook on when it is going to stop growing? Any chance Trudeau
and the Liberals will pile on less spending and debt after 2025?
Federal government poised to pile on more spending and debt
Nov 16, 2023
Next week, the Trudeau government will release its fall fiscal update, which, considering the sorry state of federal finances, should demonstrate a newfound approach to spending and borrowing. But don’t hold your breath.
Although the Trudeau government describes itself as “fiscally responsible,” in reality it has a track record of unrestrained spending and large budget deficits. And it’s overseen the five highest years (2018 to 2022) of per-person program spending (adjusted for inflation) in Canadian history. Even excluding COVID-related spending, 2020 and 2021 remain the two highest years of per-person spending on record.
The Trudeau government has also run deficits every year since it took office in 2015—according to forecasts, this year’s deficit will eclipse $40 billion even though COVID is in the rearview mirror. Consequently, federal debt will have increased nearly $900 billion since 2014/15, up to $1.9 trillion for 2023/24.
While the prime minister and Finance Minister Chrystia Freeland often downplay the level of debt accumulation by noting that Canada has the lowest net debt-to-GDP ratio among the G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States), this is misleading.
Net debt is calculated as total (gross) debt minus all financial assets, with the implicit assumption that those assets could be used to offset debt. However, the Canada and Quebec Pension Plans (CPP and QPP) are included in the financial assets used to calculate net debt in Canada. But because CPP/QPP assets are needed for existing and future retirees, in reality they can’t be used to offset government debt.
Therefore, a better measure is gross debt, which measures all liabilities that require future payment of interest and/or principal by the debtor to the creditor. Compared to 29 other advanced economies, including the G7 countries, Canada’s gross debt as a share of the economy ranks 20th—meaning Canada is among the most indebted countries.
Clearly, the Trudeau government has been anything but fiscally responsible. And the current levels of spending and borrowing impose real costs on Canadians.
For example, since 2014/15 federal government debt interest costs have nearly doubled—reaching an estimated $43.9 billion, or 9.6 per cent of total revenues, for 2023/24. This means roughly one in every 10 dollars Ottawa collects from Canadian taxpayers this year will go towards debt interest costs, rather than government services or tax relief.
In light of these fiscal realities, if the Trudeau government wants to move anywhere close to a balanced budget in the foreseeable future, it must take meaningful steps in the upcoming fall fiscal update to restrain spending growth.
Unfortunately, this is unlikely to happen.
In a recent report, the Parliamentary Budget Officer (PBO) estimated that, due to spending increases, the federal government will run a deficit of $46.5 billion for 2023/24—$6.4 billion more than the government’s budget projections in March.
The government will also likely include new spending in the upcoming fiscal update meant to address housing and affordability. And will likely soon table legislation on national pharmacare, which the PBO estimates will cost $11.2 billion in 2024/25 alone.
Finally, not only does this unprecedented level of spending rack up mountains of debt, according to Bank of Canada Governor Tiff Macklem, “government spending is starting to get in the way of getting inflation back to target.” In other words, more spending by the federal government to address affordability concerns could actually worsen the problem by keeping inflation (and interest rates) higher than would otherwise be the case, eroding the purchasing power of Canadians.
While Ottawa’s fiscal situation demands a fiscally responsible fall fiscal update, it’s likely we’ll see much of the same next week from the Trudeau government—more spending and more borrowing.
.
Nov 16, 2023
Next week, the Trudeau government will release its fall fiscal update, which, considering the sorry state of federal finances, should demonstrate a newfound approach to spending and borrowing. But don’t hold your breath.
Although the Trudeau government describes itself as “fiscally responsible,” in reality it has a track record of unrestrained spending and large budget deficits. And it’s overseen the five highest years (2018 to 2022) of per-person program spending (adjusted for inflation) in Canadian history. Even excluding COVID-related spending, 2020 and 2021 remain the two highest years of per-person spending on record.
The Trudeau government has also run deficits every year since it took office in 2015—according to forecasts, this year’s deficit will eclipse $40 billion even though COVID is in the rearview mirror. Consequently, federal debt will have increased nearly $900 billion since 2014/15, up to $1.9 trillion for 2023/24.
While the prime minister and Finance Minister Chrystia Freeland often downplay the level of debt accumulation by noting that Canada has the lowest net debt-to-GDP ratio among the G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States), this is misleading.
Net debt is calculated as total (gross) debt minus all financial assets, with the implicit assumption that those assets could be used to offset debt. However, the Canada and Quebec Pension Plans (CPP and QPP) are included in the financial assets used to calculate net debt in Canada. But because CPP/QPP assets are needed for existing and future retirees, in reality they can’t be used to offset government debt.
Therefore, a better measure is gross debt, which measures all liabilities that require future payment of interest and/or principal by the debtor to the creditor. Compared to 29 other advanced economies, including the G7 countries, Canada’s gross debt as a share of the economy ranks 20th—meaning Canada is among the most indebted countries.
Clearly, the Trudeau government has been anything but fiscally responsible. And the current levels of spending and borrowing impose real costs on Canadians.
For example, since 2014/15 federal government debt interest costs have nearly doubled—reaching an estimated $43.9 billion, or 9.6 per cent of total revenues, for 2023/24. This means roughly one in every 10 dollars Ottawa collects from Canadian taxpayers this year will go towards debt interest costs, rather than government services or tax relief.
In light of these fiscal realities, if the Trudeau government wants to move anywhere close to a balanced budget in the foreseeable future, it must take meaningful steps in the upcoming fall fiscal update to restrain spending growth.
Unfortunately, this is unlikely to happen.
In a recent report, the Parliamentary Budget Officer (PBO) estimated that, due to spending increases, the federal government will run a deficit of $46.5 billion for 2023/24—$6.4 billion more than the government’s budget projections in March.
The government will also likely include new spending in the upcoming fiscal update meant to address housing and affordability. And will likely soon table legislation on national pharmacare, which the PBO estimates will cost $11.2 billion in 2024/25 alone.
Finally, not only does this unprecedented level of spending rack up mountains of debt, according to Bank of Canada Governor Tiff Macklem, “government spending is starting to get in the way of getting inflation back to target.” In other words, more spending by the federal government to address affordability concerns could actually worsen the problem by keeping inflation (and interest rates) higher than would otherwise be the case, eroding the purchasing power of Canadians.
While Ottawa’s fiscal situation demands a fiscally responsible fall fiscal update, it’s likely we’ll see much of the same next week from the Trudeau government—more spending and more borrowing.
.
I don't know, Harper ran 8 straight years of a deficit with PEE PEE among the cohorts and without having to deal with a Pandemic and the after-effects of coming out of a pandemic. Imagine with this track record what a disaster Harper with Pee Pee under his arm would have created under a world wide pandemic.
https://globalnews.ca/news/2202138/...traight-deficits-like-the-ndp-liberals-claim/
24 aspirational points and only one "affordable housing" would be considered deflationaryRead this through and let's see if you see the light. If I may add, do so after you calm down. Take a breath, relax and absorb the material.
2023 Open Policy Process | 2023 Liberal National Convention | Liberal Party of Canada
Hearing ideas from Canadians is what keeps our Liberal movement strong, growing, and innovative - and we want you to be a part of it.
in 2017
Justin Trudeau’s plan to make housing great again - Macleans.ca
Canada once had a robust national housing program. Can we do it again?
and six + years latter, the results of Justins "plan" reaffirm his incompetence
then in 2023
WTF?
Justin has a plan
Justin's plan clearly failed
so
Justin claims housing isn't a primary federal responsibility
That is the behavior of a child
and now the liberals say they are going to make "affordable housing" their number one priority
sort of like the promise made to make "affordable housing" priority in 2017....... Hmm
Yet you are stunned enough to believe "affordable housing" will now be magical solved by liberals
The liberals will just create another inflationary taxpayer money pit, that does not meet its objectives
24 aspirational points & all of them will require further government control and further government spending
zero aspiration for the government to act responsibly and implement financial restraint
lots of inflationary aspiration though
I do not understand why you would provide that link
All you have accomplished is to show how the liberal have no understand of the inflation problem or they just do not care about the inflation problem
again
Inflation is political kryptonite for incumbents
This is true, right or wrong, so do not bore us with attempts to deflect blame
Attachments
Last edited:
Inflation has been worldwide, not just Canada and please never let the facts get in the way of your anti-Justin/Liberal nonsensical rants,
A pandemic and 2 wars one right after the pandemic but hey, keep going through life with rightie blinders on.
How bad is inflation in Canada compared to other countries?
Among three major economies, Canada is actually seeing the “least bad” inflation levels and core measure readings, according to Avery Shenfeld of CIBC Capital Markets.Sep 28, 2023
OMG seriously, you illustrate your sheer ignorance on the issue. I am talking about this kind of geothermal https://www.carrier.com/residential/en/ca/products/geothermal-heat-pumps/more ignorance from you
and there is this
.
Geothermal Energy
Geothermal Energy is the exploitable heat within the Earth. The interior of the planet is maintained at a high temperature by a vast store of heat, of which par...www.thecanadianencyclopedia.ca
how big is the Canadian Shield ?
View attachment 284966
just like one needs an ore body to successful drill for minerals or a hydrocarbon pool to successful drill for oil and gas , there needs to be a pool of hot water to tap into
we can not even find cold ground water for indigenous villiages to tap into
why do spew inaccurate and ignorant statements about issues you obviously do not understand?
is this pathological compulsion to intentionally mislead other hereditary?
or are just too much of a loonie left ideologue to care about about being factually correct, when portraying your ignorance as factual ?
more loonie left ideas to spend other people money to fix the problems created by the loonie left
its time to stop that idiocy, all the borrowed money has been spent, the bill has arrived
here educate your your about the farming of mushrooms
note the extensive use of diesel powered tractors, that wont run on geothermal
It relies on lower grade heat and is available everywhere at moderate depths
6 to 8 feet24 aspirational points and only one "affordable housing" would be considered deflationary
in 2017
Justin Trudeau’s plan to make housing great again - Macleans.ca
Canada once had a robust national housing program. Can we do it again?macleans.ca
and six + years latter, the results of Justins "plan" reaffirm his incompetence
View attachment 285343
then in 2023
WTF?
Justin has a plan
Justin's plan clearly failed
so
Justin claims housing isn't a primary federal responsibility
That is the behavior of a child
and now the liberals say they are going to make "affordable housing" their number one priority
sort of like the promise made to make "affordable housing" priority in 2017....... Hmm
Yet you are stunned enough to believe "affordable housing" will now be magical solved by liberals
The liberals will just create another inflationary taxpayer money pit, that does not meet its objectives
24 aspirational points & all of them will require further government control and further government spending
zero aspiration for the government to act responsibly and implement financial restraint
lots of inflationary aspiration though
I do not understand why you would provide that link
All you have accomplished is to show how the liberal have no understand of the inflation problem or they just do not care about the inflation problem
again
Inflation is political kryptonite for incumbents
This is true, right or wrong, so do not bore us with attempts to deflect blame
No solution to any problems offered, just more anger.
