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Fact check: How does Canada's current national debt compare to other G7 countries in 2025?
Executive Summary
Canada’s total government debt — when federal and provincial liabilities are combined — sits among the higher end of G7 comparators in 2025, with analyses placing the combined debt‑to‑GDP around 112–113%, which is comparable to some headline IMF country rankings that put Canada near the top ten globally [1] [2]. At the federal level alone Canada’s debt‑to‑GDP is reported substantially lower, roughly 42–43%, putting it well below the United States’ federal ratio but creating a mixed picture once provincial debts are included [1] [3].
1. Why the “two Canadass” matter — federal versus total government debt
The key analytical split across sources is between Canada’s federal debt and the combined federal‑plus‑provincial, or “general government,” debt. One set of analyses reports a federal debt‑to‑GDP near 42–43% and a combined general‑government ratio of about 112.8%, highlighting that provincial liabilities push Canada’s overall burden into G7‑high territory [1]. This distinction matters because international comparisons often use national‑account totals; when total government debt is used Canada looks much closer to heavy‑debt G7 peers, whereas federal‑only metrics portray Canada as relatively moderate compared with the United States [1] [3].
2. How Canada stacks up against G7 peers in headline rankings
One IMF‑based headline places Canada among the world’s higher debt ratios — 112.5% on a debt‑to‑GDP basis — and notes the United States and France above that level in 2025, with Japan substantially higher still [2]. Other commentary underscores that Canada’s total government ratio is high enough to be included in market and policy debates alongside the US, France, and Japan, even if it is not always the focal point of concern [4]. The apparent discrepancy between federal and total measures explains why some lists put Canada among the more indebted G7 nations while others do not [1] [2].
3. Recent trajectory — is Canada’s fiscal picture getting worse faster than peers?
Several analyses flag a deteriorating trajectory for Canada’s finances. One report estimates a dramatic decade‑long rise in Canada’s debt measures — including a 25.23 percentage‑point increase in debt‑to‑GDP from 2014 to 2024 and a large increase in government spending as GDP share — implying Canada’s fiscal deterioration outpaced other G7 countries over that period [5]. Complementary forecasts by parliamentary and budget analysts indicate the federal ratio is no longer declining and may climb toward the mid‑40% range, suggesting the near‑term outlook is upward [3] [6].
4. Supply and policy drivers — what’s behind the rising numbers?
Analyses attribute rising Canadian debt levels to ambitious fiscal interventions and expanded borrowing. One report projects government debt supply hitting record C$612 billion driven by policy decisions to use the federal balance sheet for investments, reflecting a deliberate policy choice toward more federal spending [6]. Other sources point to structural and cyclical pressures — higher program spending, pandemic legacies, and provincial deficits — as drivers of the jump in combined debt measures, indicating that both policy decisions and legacy liabilities are central to the trajectory [6] [1].
5. Market and policy implications — how serious is this for Canada compared with the G7?
Commentary signals that rising sovereign debt ratios have become a market pressure point for major economies, with the US, Japan and France drawing the most scrutiny; Canada’s increasing total government ratio places it within this broader G7 vulnerability conversation [4] [2]. Analysts emphasize that Canada is in a nuanced position: lower federal leverage than some peers but high overall liabilities when provincials are included. That mixed signal complicates rating, borrowing costs, and policy choices, with forecasts from the Parliamentary Budget Officer warning of a higher federal deficit trajectory that could erode prior fiscal anchors [3] [1].
6. Conflicting narratives and potential agendas in the coverage
The sources show competing emphases: some focus on headline IMF rankings that elevate Canada’s total debt position [2], while others stress federal prudence relative to the US, citing a lower federal debt ratio [1]. Political and policy agendas are evident: pieces highlighting record federal borrowing and promised investments frame the narrative around government spending choices [6], whereas budget watchdog analyses emphasize sustainability and forecasting risks [3]. Readers should note that selecting federal versus total metrics can advance different policy arguments.
7. Bottom line and what to watch next
The factual synthesis shows Canada’s combined government debt places it among the higher‑debt G7 members in 2025, while federal‑only metrics tell a less alarming story [1] [2]. Key indicators to monitor are the Parliamentary Budget Officer’s medium‑term projections for federal deficits, provincial budget trajectories, and official IMF or OECD national‑account updates; shifts in these figures will determine whether Canada’s position tightens toward the most indebted G7 members or stabilizes below peers like the United States and France [3] [5].