Summary

• Budget deficits and increasing debt have become serious fiscal challenges facing the federal and many provincial governments today. Since 2007/08, combined federal and provincial nominal net debt has grown from $837.0 billion to a projected $1.5 trillion in 2019/20.
• In 2019/20, combined federal and provincial net debt is expected to equal 64.3% of the Canadian economy or $39,483 for every Canadian.
• Among the provinces, Ontario has the highest combined federal-provincial debt-to-GDP ratio (75.4%), while Saskatchewan has the lowest (44.3%). Newfoundland & Labrador has the highest combined debt per person ($48,478), closely followed by Ontario ($45,891). In contrast, Prince Edward Island has the lowest debt per person in the country with $28,394.
• Interest payments are a major consequence of debt accumulation. Governments must make interest payments on their debt similar to households that must pay interest on borrowing related to mortgages, vehicles, or credit card spending. Revenues directed towards interest payments mean that there is less money available for tax cuts or government programs such as health care, education, and social services.