Standing Committee on Public Accounts (PACP) Department of Finance Appearance on the Public Accounts of Canada 2024

Public Debt Charges

Issue

Public debt charges continue to increase due to higher interest rates and borrowing requirements, with $47.3 billion recorded in the 2024 Public Accounts, or 1.6 per cent of GDP.

Key points

• Based on the most recent private sector survey as noted in the Fall Economic Statement 2024 outlook, public debt charges are expected to reach $53.7 billion in 2024‑25, or 1.8 per cent of GDP, primarily reflecting higher borrowing requirements, offset in part by lower short-term interest rates.
• By the end of the forecast horizon in 2029-30, public debt charges are projected to reach $69.4 billion, or 1.9 per cent of GDP. 
• By historical standards, public debt charges remain low. For comparison, public debt charges peaked at 6.5 per cent of GDP in the early 1990s and were 2.1 per cent of GDP in 2007-08 before the financial crisis.

Background

• Public debt charges have been revised downwards in the near-term compared to Budget 2024, owing primarily to lower short- and long-term interest rates as forecasted by private sector economists until 2026-27, and lower inflation impacts on Real Return bonds in 2025‑26.
• Over the remainder of the forecast horizon, debt charges are higher compared to Budget 2024 due to higher short-term interest rates and higher borrowing requirements.

• According to the September Fiscal Monitor, public debt charges for the first half of fiscal year 2024-25 were $28.2 billion.

• Public Debt Charges are projected to be higher than the Canada Health Transfer in all years except 2025-26.