We’re through Canada’s budget season, and having set a course for 2017/18, it’s not too early for Finance Ministers across the country to think about where fiscal targets should be for 2018/19. At the federal level, net debt is tame relative to other countries, and running modest deficits (a bit over 1% of GDP) seems reasonable as long as the infrastructure projects being financed are additive to future productivity and growth.
But across the provinces, with B.C. and Alberta the key exceptions, debt burdens remain elevated. So while most of this year’s budgets met previously established targets, it’s worth asking whether future targets are aiming high enough in terms of reducing debt/GDP ratios.