Canada Seeks 1970-Era Debt Levels in G-20 Fiscal PledgeTheophilos Argitis
Canadian Prime Minister Stephen Harper pledged to return his government’s debt level to the lowest since the 1970s as part of commitments by Group of 20 nations to establish longer-term fiscal strategies.
Canada is targeting a debt-to-gross domestic product ratio of 25 percent by 2021, Harper said in a statement today from a G-20 leaders’ summit in the Russian city of St. Petersburg. Canada’s federal budget, released in March, projected debt would be 34 percent of GDP this year.
G-20 countries have pledged to offer up fiscal strategies at the summit to make debt levels more sustainable. Harper reiterated today his government plans to eliminate its deficit in 2015, which would allow it to safeguard its status as the only Group of Seven country with a stable AAA rating from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.
“We’re going to encourage our colleagues here to move in that direction as well,” Canadian Finance Minister Jim Flaherty, who is accompanying Harper in St. Petersburg, told reporters today. “Fiscal sustainability is fundamental.”
Flaherty said the 25 percent debt target is “realistic.”
That target could be brought forward if growth is “significantly” above expectations, Harper said in the statement.
“Lower debt-to-GDP ratios will result in lower taxes for Canadians and a strong investment climate that supports job creation and economic growth across the country,” Harper said.
In its last budget, the government forecast its debt would decline to 28.1 percent of GDP by the fiscal year starting April 2017.
A 25 percent debt ratio would be the federal government’s lowest since 1978, according to data on the finance department’s website. The ratio was 35 percent when Harper came to power in 2006.
Flaherty’s last budget plan, delivered March 21, seeks to limit spending growth over the next five years to the rate of inflation, which if successful, would be the slowest pace since the country last eliminated the deficit in the 1990s.