Canada's combined federal and provincial net debt is projected to surpass $2.44 trillion this fiscal year, according to a new report from the Fraser Institute that tracks borrowing trends since the 2008 recession.
The public policy organization found that inflation-adjusted net debt has nearly doubled from $1.24 trillion in 2007-08, representing a 97.7 per cent increase over the 18-year period. Ottawa accounts for most of the growth, with federal net debt rising by $712.7 billion, or 93.7 per cent, during that span.
Author Jake Fuss, the institute's director of fiscal studies, noted that governments at both levels have added $603.7 billion in net debt since 2019-20 alone, a 32.8 per cent jump largely tied to pandemic spending. "A long-term plan to return to balanced budgets is necessary if Canadian governments are going to begin the difficult task of stemming debt accumulation and eventually reducing the debt burden," Fuss wrote in the bulletin.
The report highlights a shift away from the fiscal restraint seen from the mid-1990s to the late 2000s, when federal net debt fell by $364.5 billion. In contrast, the past 18 years have seen Ottawa accumulate nearly double the amount it repaid during that earlier period of prudence, Fuss explained.
At the provincial level, every jurisdiction has seen net debt rise. British Columbia recorded the sharpest percentage increase at 200 per cent, reaching $70.3 billion. Manitoba followed with a 144.7 per cent rise to $22.5 billion, while Saskatchewan added 108.9 per cent to hit $9.4 billion. Ontario holds the largest absolute debt among provinces at $459.4 billion.
Alberta, which had a net financial asset position 15 years ago, now carries $91.3 billion in net debt. Increases in Quebec and most Atlantic provinces have been more modest, at 35 per cent or less.
Combined net debt now equals 75.4 per cent of Canada's gross domestic product, with the federal share at 45.4 per cent and provincial debt at 29.9 per cent. Manitoba leads provinces with the highest debt-to-GDP ratio at 91.3 per cent for 2025-26, while Alberta maintains the lowest at 8.1 per cent.
Newfoundland and Labrador tops the list for combined federal and provincial debt per person at $71,611 when federal obligations are allocated by population share. Ontario follows at $63,574 per capita, while Albertans face the lowest burden at $42,368 per person.
Fuss warned that federal net debt could climb another 25.6 per cent to $1.86 trillion by 2030-31. All provinces except Manitoba and Ontario are projecting deficits through at least 2028-29, according to the analysis.
The growing debt load carries economic consequences, the report states. Higher government borrowing tends to push up long-term interest rates, which can crowd out private investment and slow productivity gains. "Revenues directed towards interest payments leave less money available for government programs such as health care, education, social services, or tax relief," Fuss wrote.
The Fraser Institute study draws on data from federal and provincial budgets and public accounts. It compares current trends to earlier eras, noting similarities to the 1970s through early 1990s when deficits and debt accumulation were more routine.
Officials in several provinces have pointed to economic pressures and spending needs as reasons for continued deficits, though the report does not include direct responses from government spokespeople. The analysis calls for renewed focus on fiscal balance to ease future burdens on taxpayers and the broader economy.