Interest costs for federal debt soar 37% to new highs
Ottawa spent $11.3 billion in interest payments during 2022’s third quarter, compared to $8.3 billion the same quarter in 2022
Federal interest payments on debt soared more than 37 per cent in the third quarter of 2023 over the previous year, new data published by Statistics Canada show, as rising interest rates collided with Ottawa’s record borrowing to drive the cost of maintaining public debt to new highs.
General government debt, including subnational governments, increased a combined 20.7 per cent, as provinces and territories experienced a more modest 10.7-per-cent average growth in interest costs.
The federal government spent $11.3 billion in interest payments during 2022’s third quarter, compared to $8.3 billion the same quarter in 2022.
“Over the quarter, federal government devoted 10.1 cents for every dollar of revenue to the payment of interest,” the Statistics Canada report said. The provinces and territories on average paid 7.7 cents out of every revenue dollar toward debt interest.
The ratio of interest expense to federal government revenue rose “significantly” over the year, from 7.9 per cent to 10.1 per cent, it said.
Former Bank of Canada Governor David Dodge had proposed a 10 per cent ratio as a fiscal guardrail which would keep debt service charges below one-tenth of revenue, but this report from Statistics Canada means the government has already blown through the hypothetical guardrail.
