OTTAWA (AFP) – Canada has spent hundreds of billions of dollars to help workers and keep businesses afloat during the pandemic, causing its national debt to skyrocket. But usually frugal Canadians don’t seem to care.
Today’s snap election is set to herald an era of higher spending, with the usually thrifty Liberals and Conservatives neck and neck pledging more government aid, a monumental change for Canada after decades of tightening the economy. the belt.
“It’s not that I don’t care about the debt, I just don’t think about it as much as my parents and previous generations who thought it was a huge problem,” Meg Sweeney, 23, said recently. university graduate. AFP.
Canadians aged 65 and over, who will soon make up a quarter of the population, are not afraid of having to repay borrowed funds, while millennials who will likely fall behind are supporting higher social spending.
Canada entered the pandemic in a strong fiscal position after a long period of frugality, which allowed it to distribute hundreds of billions of dollars in COVID emergency aid.
This, however, cost it its AAA debt rating after Fitch downgraded the country’s rating one notch to AA +.
It also pushed Ottawa’s debt to a projected C $ 1.2 trillion (US $ 960 billion) in fiscal year 2021-2022, with a record debt-to-GDP ratio of 51.2. percent that would only drop slightly by 2025-2026, from an average of 31 percent before the pandemic.
Justin Trudeau’s Liberals are proposing C $ 78 billion in new spending. His main challenger, Conservative leader Erin O’Toole, also believes the government should spend more to pull the country out of recession. O’Toole is proposing C $ 51 billion in new spending to “kick-start the economy” and use the resulting increase in income to balance the budget in 10 years.
“This election is about those who you think can pull us out of the recession and rebuild the economy,” O’Toole said at the start of the election campaign.
Asked about the debt, Trudeau replied, âIt is important to be financially responsible. It is important to live within our means. I think it’s also important to make the right investments so that future generations can prosper. “
Trudeau noted that record interest rates have made the cost of borrowing cheap.
But Kevin Page, director of the University of Ottawa’s Institute of Public Finance and Democracy, warned that there is always a risk that rates will rise.