Deficit risks
Re: Provinces face challenging fiscal risks, Kyle Hanniman and Trevor Tombe, Jan. 13
The authors state: “A key concern — apart from record high deficits — is whether interest rates will rise or economic growth rates will fall.” However, it’s the “apart from” part, that we must focus on to understand the trajectory of the debt ratio. In this past year alone, the $500 billion level of Canadian government deficits has caused an approximate 23 percentage point increase in the debt ratio, totally swamping the effect of interest rates and economic growth rates. even in the absence of COVID lockdowns does it look like government deficits will get under control anytime soon?
Alex Macmillan, Kingston, Ont.