All but 3 Provinces Have Debt Burden Exceeding Size of Their Economies: Study
Seven of Canada's 10 provinces have a combined public debt exceeding the entire value of their economies, a situation that can stall economic growth and affect living standards, a new study suggests.
Childs based his analysis on previous studies of the relationship between public debt and economic growth. He found that countries whose governments had debt above 90 percent of their GDP tended to experience slower economic growth.
Alberta had the lowest ratio of all provinces, with its combined debt accounting for 63.8 percent of the province's GDP. Next was Saskatchewan, whose debt represented 77.5 percent of the size of its economy, and British Columbia, with a ratio of just under 80 percent.
The author noted that, although the federal government's debt does not exceed the 90 percent threshold at which economic growth could begin to slow, factoring in the provinces' situations provides a clearer picture.
The federal government's debt grew by 47 percent in the last five years, from just under $1.1 trillion in 2018 to $1.6 trillion in 2023, the study noted. This represented about 55 percent of its nominal GDP (unadjusted for inflation)–an encouraging outlook since it is below the 90 percent threshold.
