Thank you, Mr. Chair.
I'll start by explaining how I understand the IMF calculation. Perhaps Finance may want to jump in on this as well.
To me, the IMF calculation of net debt to GDP is a good measure from a relative point of view, but not from an absolute point of view. Relatively, the measure is very good because it shows how Canada compares on a relative basis, in apples-to-apples comparisons to other countries. It essentially shows that the next best country in the G7 has a debt burden that is roughly twice Canada's—and I believe that's Germany—and then after that I believe it's the U.K. and the U.S. that are four times that of Canada. On a relative basis, it's a good measure.
I'm not so fond of the percentage comparison, though, because it takes the federal government's net debt and, as I understand it, deducts the federal government's pension liabilities. The $240 billion that the federal government owes in pension liabilities to its employees, I believe, is deducted. It adds in the net debt of the provinces and of the local governments, so it expands net debt to not just a Government of Canada definition but to a definition of all net debt of all governments in Canada. Then it deducts the assets of the Canada pension plan and the Quebec pension plan. Again, it goes through all of that to try to put things on a comparative basis to other countries, because not all countries record their pension liability. One reason Canada can get 19 years' worth of clean audit opinions is that Canada records its pension liabilities, while other countries don't.
In the IMF's calculation, they have to balance all those things off to try to get an apples-to-apples comparison, and that's why I say that on a relative basis I agree with the results of it. When it comes down and says that Canada's net debt to GDP is roughly 27.6% or something like that, that's a number that doesn't include all the debt of the federal government, because it excludes the pension liability and reduces the debt by the assets in the Canada pension plan and the Quebec pension plan, which are not assets that can be used to pay down any government debt. I don't like the 27%, and I don't think people should focus on the 27%, but relatively, it's a good measure.
In my opinion, the best measure of debt to GDP—in terms of the federal government itself—is the net debt-to-GDP measure, which is the $714 billion of net debt in relation to the GDP of Canada, which is probably just slightly over $2 trillion. I believe that comes out to somewhere around 35%, and I think that is the best measure.
If you go through the financial statement discussion and analysis, you will see at least three other comparisons of debt to GDP. You'll see the accumulated deficit to GDP, the interest-bearing debt to GDP, and the net debt to GDP. You could also do a calculation of total liabilities to GDP, so there are many different ways of comparing debt to GDP, depending on your definition of debt. I think the best one is to do a comparison of net debt to GDP on a financial statement basis.
I like the IMF one from a relative point of view, but I don't like it from an absolute point of view.