Monday, June 27, 2022
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

Debt dangers: Jack Mintz in the Financial Post

January 14, 2021
in Columns, Domestic Policy Program, Economic policy, In the Media, Jack Mintz, Latest News
Reading Time: 2 mins read
A A

Large primary deficits in the next several years and rising interest rates will destroy the fiscal firepower we would need should another recession come our way, writes Jack Mintz in the Financial Post. Below is an excerpt from the article, which can be read in full here. 

By Jack Mintz, January 14, 2021

Governments throughout the world seem to believe the following truism: Low interest rates will let them run up debt with little consequence for many years to come. Why? As the argument goes, debt costs are manageable so long as — after the initial COVID slowdown has passed — the economy grows more quickly than the debt.

Public debt as a share of GDP is an important indicator to investors as to whether a government will be able to cover its debt obligations without a financial crisis and currency devaluation. The ability to roll over public debt and pay interest charges depends on investor confidence in a government’s capacity to raise revenues. This is why rate agencies typically focus on debt as a share of GDP to measure the “debt burden.”

The debt-to-GDP ratio can spiral, however, for two reasons: prolonged periods of what economists call “primary deficits” and interest rates in excess of GDP growth rates. Let me explain each in turn.

A primary deficit occurs when public revenues don’t cover the government’s non-interest expenditures. Right now, the federal government is running an eye-popping primary deficit. It expects its spending, excluding debt charges and net employee accrued losses, to be $621 billion in fiscal year 2020-21. On the other hand, its revenues will be only $275 billion, which means the federal primary deficit is $346 billion or 16 per cent of GDP.

Ottawa last ran primary deficits in the Trudeau/Mulroney decade of 1975-1986. But they were puny by comparison, averaging just two per cent of GDP each year. Even so, with the high inflation and interest rates of those years, accumulative primary deficits eventually led to Canada’s almost going to the IMF for a bailout in 1994.

***TO READ THE FULL ARTICLE, VISIT THE FINANCIAL POST HERE***

Tags: COVID-19economic policyeconomyfiscal policyJack Mintz
Previous Post

Webinar Panel Video: A Way Forward, Part II – Defending human rights in China

Next Post

B.C. shows reducing GHG emissions will be difficult: Philip Cross in the Financial Post

Related Posts

MLI Senior Fellow Charles Burton added to Russian sanctions list
Releases

MLI Senior Fellow Charles Burton added to Russian sanctions list

June 27, 2022
Ukraine loses Severodonetsk: Christian Leuprecht on CBC News
Europe and Russia

Ukraine loses Severodonetsk: Christian Leuprecht on CBC News

June 27, 2022
Hollywood should get the facts and show respect to Indigenous peoples
Indigenous Affairs Program

Hollywood should get the facts and show respect to Indigenous peoples

June 27, 2022
Next Post
B.C. shows reducing GHG emissions will be difficult: Philip Cross in the Financial Post

B.C. shows reducing GHG emissions will be difficult: Philip Cross in the Financial Post

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

First Name
Last Name
Email Address

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.