Thank you.
Evidence of meeting #139 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
A video is available from Parliament.
Evidence of meeting #139 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
A video is available from Parliament.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you to all of our witnesses for the work you do for our country.
Just in regard to the previous conversation with the Minister of Finance, obviously Canada does have a debt and it is set in the next year to go over $1 trillion.
Could we just have a breakdown of what is federal debt, and what is market debt, and what should the interest payments be in 2018?
March 26th, 2018 / 6:35 p.m.
Nicolas Moreau Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
First, I'd like to clarify that when you referred to the $1-trillion market debt, it also takes into consideration the debt of the crown corporations. You need to distinguish the federal debt, or the debt of the federal government by itself—which is about $700 billion right now—and you need to add about $330 billion to capture the crown's debt. Basically that's the way that you would come closest.
This is the market debt, so that's the debt that is financed on the market. Basically it's different from the net debt that we often refer to when you look at the net debt-to-GDP. This is basically the overall debt of the government plus some of its liabilities, which you net out of the assets the government owns right now.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I would say that the majority of those assets, though, are not like traditional assets where you can just put them on the market and sell, because obviously there is a reason why government is retaining those.
6:35 p.m.
Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
The liabilities, we could finance them if we want. It's only that we finance as we go. It's mostly linked to a pension plan. Basically, every year we need to pay more than what we receive in some cases, so that's why we finance it on an annual basis and we don't pre-fund those liabilities.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
For the interest payments for this next fiscal year that we're coming into, what are they projected to be at?
6:35 p.m.
Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
Right now, I could say that the average interest rate that we pay on our debt is 1.2%, so the interim interest payment in terms of billions of dollars I think is around $13 billion that we will need to pay.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
Again, I've seen the number $26 billion. Is that something that you've seen?
6:35 p.m.
Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
I don't know what you're referring to.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
Again, it's my understanding that we spend about....
Yes, please.
6:35 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Sorry, that would be not just interest on market debt, but interest on other interest-bearing debt, such as our pension and benefit obligations. That is a group of about a quarter billion dollars in debt that we also incur interest charges on. It's different from a coupon payment that we pay on the market side, but it's still interest-bearing debt.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Is it expected to accelerate faster over the next year?
6:35 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Which, debt obligation?
6:35 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
I can get back to you on that. I would assume it's probably market debt, but it's hard for me to answer that with certainty. I can follow up with the clerk on that one.
6:35 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
First of all, since the government came into office, how much debt has it added and what should be expected? What is the current five-year projection from this year's budget?
6:35 p.m.
Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
That's information we can find in the budget right now in terms of deficit projection.
6:40 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Yes, I would like it read into the record, please.
6:40 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Nick, I have the answer.
On a running basis, our cumulative change in the financial position since 2015-16 fiscal year.... Sitting as of today—so we're leading up to closing the 2017-18 fiscal year towards the end of the week—we will have rallied around $36 billion in accumulated net debt.
6:40 p.m.
Conservative
6:40 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
It's about $114 billion.
6:40 p.m.
Conservative
