Prime Minister Mark Carney’s government is taking a bold approach to debt, breaking with traditional budgeting practices. While the annual deficit or surplus has long been the focus of budget discussions, economists are now questioning its relevance. The 2026 budget reveals a significant increase in non-budgetary transactions, which include loans, investments, and advances to Crown corporations. These transactions, which do not appear in the deficit or net debt calculations, have surged to $87.2 billion this fiscal year, leading to a total borrowing requirement of $149.5 billion.
Critics, including Conservative Leader Pierre Poilievre, argue that the government is using accounting tricks to obscure the true cost of its spending. “It doesn’t matter if you put your spending on three credit cards or one. You still have to pay the interest. And that’s what Canadians are paying now,” Poilievre stated. Supporters, however, view the strategy as a novel way to spur economic growth without directly increasing program spending.
The government is increasingly relying on Crown corporations like Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) to implement its economic agenda. These entities generate revenue by selling goods and services, and their lending activities have historically been profitable. The budget also includes debt-financed purchases of non-financial assets, such as defense hardware. The annual cost of servicing the growing debt is projected to climb to $85.5 billion by 2030-31 from $60.2 billion this year.
Former senior finance adviser Justin To noted that the approach aligns with the philosophy behind the Canada Infrastructure Bank, which aims to support activities deemed too risky for private-sector banks. The government has also appointed high-profile executives from the private sector to lead new economic agencies. However, critics like former parliamentary budget officer Kevin Page argue that the government should be more transparent about its borrowing plans, citing better reporting practices in countries like New Zealand and Britain.