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July 29, 2021

Ottawa’s Gamble on Canada’s Fiscal Future

  • The federal debt-to-GDP ratio could easily rise above current peak levels associated with the pandemic. Only small changes in assumptions of economic growth and interest rates can significantly alter the course of the projected debt burden.
  • Authors Alexandre Laurin and Don Drummond explore the sensitivity and fragility of Canada’s fiscal prospects by testing Canada’s future simulated debt burden under alternative scenarios.
  • The authors’ baseline scenario shows the federal and provincial debt burdens on an upward long-run drift with the federal debt ratio rising from 51 percent of GDP in 2021 to reach 60 percent by 2055, and the combined federal and provincial net debt ratio possibly reaching over 140 percent by 2055.
Alexandre Laurin
Alexandre Laurin

Alexandre Laurin joined the C.D. Howe Institute in 2008 and became Director of Research in 2014.  From 1999 to 2008, Mr. Laurin worked for the Parliamentary Information and Research Service where he provided reports, analysis and policy advice to Members of the House of Commons and the Senate and to parliamentary committees on a non-partisan and confidential basis.

Don Drummond
Don Drummond

Don Drummond is a Stauffer-Dunning Fellow and Adjunct Professor at the School of Policy Studies at Queen’s University. In 2011-12, he served as Chair for the Commission on the Reform of Ontario’s Public Services. Its final report, released in February 2012, contained nearly four hundred recommendations to provide Ontarians with excellent and affordable public services.