Records show public debt charges saw a 42% increase last year, primarily due to ongoing federal overspending and higher interest rates.According to Blacklock’s Reporter, the costs associated with carrying the federal debt are expected to increase by an additional 26% this year.“Public debt charges were up $10.5 billion or 43%, largely reflecting higher interest rates on the stock of interest-bearing debt,” said Public Accounts tabled in Parliament. The federal debt is currently $1.2 trillion.Debt costs amounted to $24.5 billion in 2021. According to Public Accounts, they surged 42% to $34.9 billion last year.The Department of Finance has recognized debt costs are expected to increase further this year, reaching at least $43.9 billion.Public Accounts said about 10¢ of every tax dollar is now used to pay interest on the federal debt. “The average effective interest rate on the government’s interest-bearing debt in 2022 was 2.2%, up from 1.6% in 2021,” it said. “The average effective interest rate on unmatured debt was 2.1%.”Bank of Canada Governor Tiff Macklem has increased interest rates ten times since March 2022, bringing them to the highest levels since 2001.This week, Macklem informed the Commons Finance committee there was no doubt it would impact the cabinet's 2024 budget.“Lower growth and higher interest rates will certainly impact on the government’s budget,” testified Macklem. “I don’t think fiscal policy is in a situation where it is unsustainable, but I do think protecting our very good fiscal position is important.”“Many economists have told us we could be laying the groundwork for a recession,” said Macklem. “We are not in recession. Yes, we are in a period of low growth. That is necessary to reduce inflationary pressures.”In their testimony before the Senate National Finance committee on October 3, finance department managers admitted they were unaware of the current cost of debt interest.“At present, we do not have a revised estimate for public debt charges in 2023,” said Evelyn Dancey, assistant deputy Finance Minister.Senator Elizabeth Marshall (NL) stated taxpayers deserve to be informed about the debt servicing cost.“I find the government is very secretive,” said Marshall.“That is unbelievable. I just can’t get anything on public debt charges. I can’t get any clarification on the borrowing. I am not happy that it takes two months to get the Fiscal Monitor.”
