Canadian economist Jack Mintz said that rising federal and provincial debt could lead Canada toward a sovereign debt crisis.
The warning highlights a growing fiscal vulnerability as spending outpaces revenue. If the government fails to implement tighter deficit discipline, the resulting debt load may compromise the country's long-term economic stability.
Mintz said that several primary drivers are pushing debt higher. These include an increasing need for defense spending and the pressures of an aging population. These factors, combined with a lack of deficit discipline, create a trajectory where government liabilities continue to grow faster than the economy can support.
This domestic trend mirrors a broader international pattern. Global gross public debt reached 95% of world GDP in 2024 [1]. Mintz said that Canada is not immune to the risks facing other highly leveraged nations.
While some provinces have managed growth more effectively, others have increased spending and taxes. Mintz said that the lack of a cohesive strategy to curb deficits across different levels of government increases the risk of a fiscal breaking point.
Mintz said that the combination of demographic shifts and geopolitical instability requires more funding for healthcare and security. However, without a corresponding increase in revenue or a reduction in other expenditures, the debt-to-GDP ratio will likely continue to climb. This cycle risks triggering a crisis where the government can no longer reliably service its obligations.
“Rising government debt will hit Canada, too”
The warning suggests that Canada's fiscal health is increasingly tied to global debt trends. By linking domestic spending on defense and demographics to the 95% global debt-to-GDP ratio, the analysis indicates that Canada may face a systemic crisis if it does not pivot from deficit-funded spending to a more sustainable fiscal framework.
