Finance Minister Chrystia Freeland has missed this year’s deficit target by 17%, according to a report by the Budget Office, with debt servicing costs becoming the fastest-growing expense in the federal budget.Blacklock's Reporter says the report, Economic and Fiscal Outlook October 2024, revealed that last year’s deficit, initially estimated by Freeland at $40 billion, is actually closer to $46.8 billion. Similarly, this year’s deficit, projected at $39.8 billion, is now expected to reach $46.4 billion. The increase, according to analysts, is largely due to “new spending measures announced by the government,” and is based on a “status quo policy” that assumes no further programs will be introduced before the year ends.The soaring cost of servicing the national debt is also a key concern. Interest charges on bonded debt, which were as low as $24.5 billion in 2021, are projected to hit $52.8 billion this year. By 2027, these charges are expected to surpass $60 billion, a historic first for Canada.Despite promising to rein in spending, Freeland's April 16 budget, Fairness for Every Generation, has not lived up to expectations. “It would be irresponsible and unfair to pass more debt to the next generation,” Freeland said at the time, stressing the importance of careful fiscal management. “It is not our money, it is the money of Canadians, and they quite rightly expect us to be really thoughtful,” she added.However, the government’s fiscal track record shows repeated missed deficit targets. Last year’s shortfall of $46.8 billion was initially forecast to be no more than $35 billion.Canada’s federal debt is set to reach new heights, with bonded debt expected to exceed $1.3 trillion by 2026. The Department of Finance announced in May that it had to raise the national debt ceiling from $1.83 trillion to $2.13 trillion to accommodate the rising borrowing needs. “The increase is a result of the borrowing,” said Alexander Bonnyman, director of debt management, in testimony before the Commons finance committee.Conservative MP Marty Morantz questioned the growing debt during committee hearings, asking, “The reason is because the Government of Canada is pushing up against the $1.8 trillion?” Bonnyman confirmed, “The increase is as a result of the borrowing needs.”Canada has not balanced a budget since 2007, and concerns about unchecked borrowing have been raised by Opposition Leader Pierre Poilievre. In 2020, he asked Freeland whether she had a limit in mind for the national debt. “We are mindful that limits exist,” Freeland responded, though she stopped short of specifying an exact figure, saying, “There is no blank cheque.”
