5 September 2013
St. Petersburg, Russia
The Government of Canada remains committed to returning to balanced budgets and ensuring that our economy can continue to grow and create jobs. To this end, at the G-20 Summit in St. Petersburg, Russia, on September 5, 2013, Prime Minister Stephen Harper announced Canada’s commitment to achieve a federal debt-to-GDP ratio of 25 per cent by 2021.
Establishing a debt-to-GDP target of 25 per cent by 2021 is consistent with the Government of Canada’s plan to return to balanced budgets by 2015.
This debt target is conditional on the economic outlook. The Government may consider advancing the planned targets if Canada’s economic growth is significantly stronger than expected.
Canada’s debt target is in line with the G-20 Los Cabos commitment for advanced G-20 economies to “identify credible and ambitious country-specific targets for the debt-to-GDP ratio beyond 2016, where these do not currently exist, accompanied by clear strategies and timetables to achieve them”.
The debt-to-GDP target refers to Canada’s federal debt. Progress towards this target can be monitored and assessed twice annually through federal government projections published in the federal Budget and the Fall Update of Economic and Fiscal Projections.
Establishing a transparent fiscal target that is easily monitored underscores Canada’s commitment to the sound management of public finances.
Canada's provinces have all committed to return to budgetary balance over the medium term and have taken actions to achieve this objective. The Government of Canada encourages provincial and territorial governments to further strengthen their fiscal discipline by implementing longer-term debt reduction targets of their own.
Canada has the lowest total government net debt of any G-7 country, which includes federal, provincial, territorial and local governments, as well as the Canada Pension Plan and Quebec Pension Plan. Indeed, Canada’s net debt was less than half the G-7 average in 2012, at 34.6 percent of GDP. Satisfying this commitment will ensure that Canada’s net debt remains the lowest of all G-7 countries and among the lowest in the advanced G-20.
Low debt levels will result in lower taxes for Canadians and a strong investment climate that supports job creation and economic growth.
