Combining provincial and federal net-debt projections in the most recently released budgets shows the consolidated federal-provincial net debt ratio* continuing to rise rapidly from its pre-pandemic level. At an estimated 82 percent of GDP in 2028–29, governments would be wise to avoid reaching the combined ratio back to its 1995–96 high — a level widely seen as unsustainable and which required a painful fiscal correction.
Meeting the NATO 5 percent of GDP spending target will materially increase the pressure on federal debt. See this C.D. Howe Institute report to learn more.
*Net debt ratio is defined as gross debt minus financial assets
Source: Fiscal reference tables, complemented by provincial and federal budget projections. Newfoundland, PEI, and Saskatchewan report projections for years earlier than 2028–29; their figures are therefore assumed here to extend at their latest forecast levels through 2028–29.
