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The Strongest Fiscal Position in the G-7

Debt Burden Less Than Half that of the closest G-7 Country

Eleven consecutive years of budgetary surpluses prior to global recession—While other major G-7 economies ran multi-year budget deficits, the Canadian federal government posted 11 consecutive budget surpluses totalling more than $85 billion prior to 2008. With the global economic recession taking hold, Canada, like other countries, has gone into a deficit to finance its own stimulus program. Nonetheless, as a percentage of GDP, Canada’s deficits are far lower than those of other G-7 economies.

Government debt levels well below those of other industrialized nations—Canada is in good fiscal shape. With total government net debt-to-GDP ratio at 32.2 percent in 2010, Canada’s debt burden was significantly lower than the closest G-7 country (Germany). The figure below shows that Canada’s net debt burden is projected to increase by just 0.8 percentage points in the next five years. In 2016, the IMF expects Canada’s net debt-to-GDP ratio to stand at 33.0 percent compared to 85.7% for the U.S.

Source: International Monetary Fund. World Economic Outlook. April 2011. pp. 195.

Figure: Net Debt-to-GDP Ratio in Canada and its G7 Peers, 2010-2016F

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Source: International Monetary Fund. World Economic Outlook. April 2011. pp. 195.

Details of the above chart 

  • Japan: 117.5% in 2010 and 46.4% increase in Debt-to-GDP Ratio to 2016
  • Italy: 99.6% in 2010 and -0.7% increase in Debt-to-GDP Ratio to 2016
  • United States: 64.8% in 2010 and 20.9% increase in Debt-to-GDP Ratio to 2016
  • France: 74.6% in 2010 and 2.4% increase in Debt-to-GDP Ratio to 2016
  • United Kingdom: 69.4% in 2010 and 4.1% increase in Debt-to-GDP Ratio to 2016
  • Germany: 53.8% in 2010 and -1.2% increase in Debt-to-GDP Ratio to 2016
  • Canada: 32.2% in 2010 and 0.8% increase in Debt-to-GDP Ratio to 2016

Lower tax burden and lower interest charges for investors—At a time when most comparable countries will be increasing taxes on business, Canada’s finances give the country the flexibility to maintain or even reduce the total tax burden on corporations, including foreign direct investors.