Ontario government adding billions in new debt, despite balanced budget

“A return to operating budget balance is, of course, welcome news for the most indebted subnational government in the world, but it doesn’t undo all the damage that’s been done to the province’s finances over the past decade.” Crucially, the 2017 budget does not present a detailed plan to significantly lower the province’s near historically high debt-to-GDP ratio, which is projected to be 37.5 percent this year. The debt-to-GDP ratio is used to measure the sustainability of a jurisdiction’s debt burden. While the government has committed to lowering it back to its pre-recession level of 27 per cent, it has not yet provided an adequate detailed plan to make progress towards this goal in the years ahead. In fact, the government’s medium term fiscal plan shows the debt-to-GDP ratio falling by just 0.6 percentage points over the next three years. What’s more, as the provincial government keeps adding more debt, Ontarians will have to pay more and more interest. In 2017/18, interest on Ontario’s debt is expected to cost taxpayers a staggering $11.6 billion. “The province continues to be buried under a mountain of debt, and the money Ontarians must pay to service that growing debt is money not being spent on health care, education, tax relief and other important priorities.” MEDIA CONTACT: Bryn Weese, Media Relations Specialist, Fraser Institute, bryn.weese@fraserinstitute.org