Canada's Debt Burden Lowest Among G7 Nations, Policymakers Advised to Maintain Advantage

Canada's central government debt has undergone significant changes over the years. In 1995, it stood at 64 percent of GDP, making it the second-highest in the G7. However, by 2024, Canada had reversed this position and reduced its debt burden to 52 percent of GDP.

This reduction in debt has made Canada more attractive to investors and has resulted in a lower borrowing cost advantage compared to other G7 countries. The Bank of Canada's inflation-targeting agreement is crucial in maintaining this advantage.

Policymakers are advised to continue reducing the debt burden and renewing the Bank of Canada's inflation-targeting agreement to preserve this favorable position.