Interest payments on the federal debt as a percentage of total spending has risen by over 300 per cent in the last 5 years from 3.14% in 2020-21 to 11.11% in 2023-24.
Meanwhile, Prime Minister Carney’s 2025 “budget-less plan” includes increasing the deficit by $224.8 billion through 2025-2029 which will drive our federal debt to rise to a whopping $1.461 trillion.
With a Canadian GDP in 2024 of approximately $2.14 trillion we can expect our debt to GDP ratio to rise to 68%, unless of course one expects that the Canadian economy will magically experience a level of explosive growth far exceeding our average of 1.7% over the past decade. Considering real GDP growth per capita of 0.8%, the lowest rate of growth since the 1930’s, we wouldn’t bet the farm on it.
It will be interesting to see what the percentage of total federal spending will be allocated to interest payments by 2030.
We just can’t stop seeing a picture of a snake eating its own tail.