How does Canada’s federal net debt compare to other G7 countries in 2024–25?
Executive summary
Canada’s net-debt-to-GDP position for 2024–25 is reported as the lowest in the G7 when measured on the IMF “general government” net-debt definition that offsets public pension assets — the federal Annual Financial Report cites an IMF-based total government net debt-to-GDP of about 11.9 percent and Department of Finance materials cite comparable IMF-based net‑debt comparisons [1] [2]. Critics and alternative measures show a much different picture if gross debt or federal-only metrics are used, so the headline “lowest in the G7” depends entirely on which debt concept is compared [3] [4].
1. Why “net” matters: the headline claim and its data source
The claim that Canada has the lowest net debt in the G7 is grounded in IMF-style “general government” net‑debt calculations that deduct assets such as Canada Pension Plan and Quebec Pension Plan (CPP/QPP) buffers from liabilities; Ottawa’s documents and the IMF figures are explicit that this produces a very low net‑debt share — roughly 11.9 percent for total government net debt in 2024 according to the government’s Annual Financial Report [1], and Department of Finance publications point to IMF comparisons showing Canada at the bottom of the G7 on net debt [2] [5].
2. Different measures, different rankings: gross vs net, federal vs general government
When debt is measured on a gross basis — which ignores pension assets and treats total liabilities without offsets — Canada’s ranking worsens substantially: reports show Canada falling to much higher positions among advanced economies on gross debt, and Fraser Institute analysis highlights that Canada is mid‑pack or worse on gross debt among the same peer set [3] [6]. The federal government also reports a federal debt‑to‑GDP ratio materially higher than the IMF general‑government net figure — for example, the Department of Finance projects a federal debt‑to‑GDP around the low‑40s percentage range for 2024–25 in its fiscal outlook, not the low teens reported for general‑government net debt [2] [5].
3. The policy and accounting dispute: pension assets and what they mean
The political and analytical debate turns on whether CPP/QPP and similar assets should be allowed to “net down” government liabilities: the government and some international compilers use that broader, general‑government net concept, which produces a favourable Canadian ranking [1] [2]. Fiscal watchdogs such as the Fraser Institute dispute the substantive meaning of that treatment, arguing CPP/QPP assets are earmarked for pensions and not fungible to pay government debt, so using them to lower Canada’s net‑debt metric is misleading — the Fraser Institute points out Canada has experienced one of the largest increases in gross debt over the past decade despite the attractive net‑debt ranking [4] [7].
4. How to read the numbers: a balanced conclusion
The blunt answer is: according to IMF‑style general government net‑debt measures used by Ottawa and international institutions, Canada had the lowest net debt‑to‑GDP in the G7 for 2024–25 [1] [2]; however, that conclusion depends on offsetting pension assets and on using “general government” aggregates rather than federal‑only gross debt. Alternate measures — gross debt, federal‑only debt‑to‑GDP, or analyses that exclude pension assets — place Canada significantly higher among peers and highlight substantial increases in Canada’s overall debt burden over the last decade [3] [7]. Both perspectives are factually supported by the public documents: the government emphasizes net‑debt comparisons with IMF data to show a relatively light burden [1] [8], while independent analysts caution that different accounting choices lead to a less favourable picture [4] [7].