Thank you very much.
I appreciate the opportunity to ask some questions today. I'll focus on your recent economic outlook, if that's okay.
One thing I've been starting to pay a bit more attention to is debt service costs. We've seen even in the baseline projection provided in the fall economic update that just within a few years, debt service costs will approach about $80 billion. Another fact that I understand could impact the potential for the fiscal outlook is that about 40% to 50% of federal government debt is purchased by hedge funds. This is outlined by the Bank of Canada. It's been outlined as a rising vulnerability.
If there is an economic event outside of Canada and a large proportion of our expenditures go to servicing the debt.... We also fund our debt with short-term instruments of mostly two and three years. The average maturity is about 6.6 years for the Canadian federal government, as I understand it. This year we have to borrow $510 billion in the market. Next year we have to borrow almost $600 billion. The year following that, two years from now, it will be another $550 billion, which means we're basically rolling over the debt frequently.
My questions are more around the sensitivity now to the fiscal framework based on borrowing costs. We've seen the five- and 10-year rates go up. Borrowing costs are going up and are not coming down, but the entire fiscal projection the government makes is actually on borrowing costs going down.
I'm wondering if this is an issue you're exploring. I know that you do some sensitivity analysis. I just wanted to get your feedback on keeping an eye on the debt service cost number.