Federal Government Debt Service Skyrockets: New Data
The Government of Canada spent $3.6 billion dollars on interest expenses in the month of February 2024, this is up 43% from February 2023 costs, new data from the Department of Finance reveals.
The Department of Finance attributes this increase to, quite simply, “higher interest rates” after the Bank of Canada hiked its overnight policy rate 10 times during 2022 and 2023.
The Total Interest-Bearing Debt Also Shot Up
The Government saw a budgetary deficit of $17.3B between April 2023 and February 2024. (This is for 10 months of the year, because why not make it super hard to figure out?)
Annualized, this represents a $20.7B deficit, meaning the Government is on track for a $20B+ shortfall this fiscal year.
This deficit is realized because:
- Revenues were up 3.1%, largely from an increase in personal income tax revenue, but
- Expenses were up 6.7% , reflecting increases from all categories of spending.
To shore up its cash balance, the Government of Canada borrowed an additional $70 billion dollars in the period between April 2023 and February 2024.
Canada’s Net Debt is Now $1.3 Trillion Dollars
All totaled, the Government of Canada’s total liabilities now sit at $2T (almost exactly) and when you subtract their assets out you get a net debt of $1.3 trillion, an increase of $24 billion from February 2023.
The cost to service this debt?
Well, that’s the $3.6B per month interest expense referenced at the beginning of this article.
To get an understanding of how large this debt service payment is, we can reference the graphic below, which shows the 10-month “public debt charges” of $42.9B (on the right) being twice as large as the revenue from “EI Premiums” from the revenue side on the left:
Government Payroll Expenses Reach New Heights
The Government of Canada spent $5.6 billion dollars on payroll expenses in the month February 2024, up 7.1% from February 2023.
This is the cost of its 439,000 army of public servants – we published an article recently on the Federal Government’s staggering hiring over the last few years.
In short though, the Parliamentary Budget Officer estimates that the Government of Canada will likely have hired over 100,000 public employees during the period between 2015-2025.
The PBO also noted that current projections dont even include positions needed for new programs: “Current plans do not include additional FTEs that will likely result from potential new measures announced by the Government in Budget 2024.” the PBO writes.
