Rising interest rates will see a doubling of federal debt charges within four years, Budget Officer Yves Giroux last night warned the Senate banking committee. New figures indicate interest on the federal debt will eclipse the Canadian military budget next year and continue rising..“Have you looked at the impact in regards to the interest the government will have to pay on its debt?” asked Senator Pierre Ringuette (N.B.). “That is something that will have a major impact on public finances,” replied Giroux..“We have looked at the impact of increasing interest rates as well as the increase in the stock of debt and we estimate that in the next four years interest payments will probably double compared to their level in 2021-2022,” said Giroux..According to Blacklock's Reporter, public debt charges cost taxpayers $20.4 billion last year. Giroux said costs were already rising. “They will probably go from $23 billion to $46 billion,” he said. “But we will be providing an updated number when we release our Economic And Fiscal Outlook, probably mid-October.”.The current military budget of $26.5 billion would be eclipsed by the cost of debt charges next year based on Giroux’s projections. “We haven’t finalized yet our Economic And Fiscal Outlook,” said Giroux. “More to come on that.”.The Bank of Canada has raised its prime rate five times this year to 3.25%. A sixth interest rate increase is expected on October 26..At his Senate banking committee testimony, Giroux said he agreed with central bank forecasts that inflation would remain high for some time. “Do you think inflation as we are now experiencing it is temporary?” asked Senator Diane Bellemare (Que.). “It depends on how you define temporary,” replied Giroux..Statistics Canada in its last benchmark Consumer Price Index put the cost of living up 7% year over year on average. The price of gasoline was up 22% followed by groceries (11% and household appliances (9%)..“Tell us about people who took advantage of inflation: Is this a reality or a myth?” asked Senator Lucie Moncion (Ont.). “Clearly it’s possible to get that impression when as a consumer you have to pay much higher prices and sometimes it doesn’t seem to make sense,” replied Giroux..“When you fill up your car and gas costs over $2 a litre and at the same time you hear refining margins have increased significantly, a consumer may have the impression they are being fleeced,” said Giroux. “But I’m an economist by training. As far as I’m concerned this is a matter of supply and demand. It’s hard to accuse anyone increasing their prices of profiting from the situation even though it may look that way.”.New Democrat MPs have accused wholesalers and retailers of profiteering. “We are experiencing greed-flation,” Party leader Jagmeet Singh told the Commons September 22. “No one else wants to talk about that.”
