Economist Jack Mintz said that rising federal and provincial debt will hit Canada if the government fails to implement tighter deficit discipline.
This warning comes as Canada faces a combination of increasing defense spending requirements and demographic pressures. If these trends continue without fiscal restraint, Mintz said the resulting debt levels cannot be sustained over the long term.
The issue is part of a broader global trend of increasing public liabilities. Global gross public debt reached 95% of world GDP in 2024 [1]. This international context underscores the risk that Canada faces if it does not address its own spending habits.
Mintz said there are two primary drivers behind the projected growth of Canadian debt. First, the need for increased defense spending to meet geopolitical challenges is putting pressure on the federal budget. Second, demographic shifts, specifically an aging population, are increasing the cost of public services and healthcare.
Without a commitment to reducing deficits, Mintz said the debt will continue to climb. He said the current trajectory is unsustainable and requires a shift in how both federal and provincial governments manage their finances.
The economist said that the lack of discipline in government spending creates a precarious financial environment. This vulnerability is heightened as the cost of servicing existing debt increases, further squeezing the available funds for other essential public services.
“Rising government debt will hit Canada”
The warning highlights a growing tension between Canada's social and security obligations and its fiscal capacity. As the population ages and global instability necessitates higher defense spending, the government must either find new revenue streams or significantly cut spending to avoid a debt crisis that could limit future economic growth.
