Canada

Canada's Deficit Widens to C$25.5B in 2025-26

Is Canada's deficit a ticking time bomb threatening a debt crisis or proof it leads the G7 in fiscal strength?

Published 2 days ago

Canada's Deficit Widens to C$25.5B in 2025-26

story

Above: Mark Carney, Canada's prime minister, during a news conference on Parliament Hill in Ottawa on April 14. Image credit: Kamara Morozuk/Bloomberg/Getty Images

The Spin

Government-critical narrative

Canada's deficit path is a ticking time bomb — federal net debt could blow past 50% of GDP within a decade if military spending commitments are met and nothing else changes. Fiscal excess is already eating into savings and investment that Canadians desperately need. Bold spending cuts, major tax reform and faster economic growth aren't optional extras, they're the only way to avoid a 1990s-style debt crisis.

Montreal Economic Institute on X C.D. Howe Institute

Pro-government narrative

Canada is the strongest fiscal position in the G7, with the lowest net debt among its peers and a pension asset base second only to Norway's as a share of GDP. The deficit through the first 11 months of 2025-26 came in at just $25.5-billion, well below the $78.3-billion budgeted. Alarm bells about Canadian debt ignore just how far ahead Canada sits compared to G7 nations carrying net debt near or above 100% of GDP.

Financial Post The Globe and Mail

Cynical narrative

Don’t be fooled by the headline deficit — it’s only part of the story. By splitting operating and capital spending, Ottawa leaves out a big share of borrowing tied to infrastructure. That shows up in rising net debt instead. Add it back in, and the shortfall is closer to $80 billion, in line with original projections, if not higher. After COVID-era spending, this accounting makes the debt look smaller than it really is.

Martyupnorth®- Unacceptable Fact Checker on X The Hub