The United States has significantly more total government debt than Canada in absolute dollar terms, with tens of trillions compared to Canada's few trillions, but when compared as a percentage of GDP (Debt-to-GDP ratio), both countries have high levels, with the U.S. generally exceeding Canada's ratio, though Canada has had high household debt relative to the G7.
Canada's debt-to-GDP ratio is about 42%, compared to over 100% in the U.S. Canadian borrowing costs are 1.2% lower than U.S. costs, the widest gap since 1870. A spike in trade uncertainty could cut Canadian business investment by 25%.
The United States has the largest total government debt by dollar amount, exceeding $38 trillion, followed by China and Japan. However, when debt is measured as a percentage of the country's economic output (GDP), Japan often leads among developed nations (around 230% of GDP), while countries like Sudan have even higher ratios (over 250% of GDP) due to extreme economic challenges.
Despite any federal assurances, the federal deficit is still projected at $78 billion for 2026, narrowing only to $57 billion by 2030, and leaving Canada exposed to higher debt costs and weak growth.
The United States GDP was $24.8 trillion in 2021. The United States has the largest economy globally and Canada ranks 9th at US$2.015 trillion.
The debt will total almost $1.3 trillion this year. When Trudeau first became prime minister, the debt was $616 billion. That means the Trudeau government is responsible for doubling the national debt. Interest charges on the debt will cost taxpayers $53.7 billion this year.
2. Who are the creditors of this debt? The debt is made up of government bonds held by individuals and financial institutions, mostly Canadian (around two-thirds of Canadian government securities are held by Canadian investors, such as insurance companies, pension funds, and financial institutions).
As the world's biggest gambling hub, Macao SAR has zero debt, bolstered by billions in gaming revenue and healthy financial reserves. Liechtenstein ranks in second, with virtually no debt and the only country in Europe ranking in the top 10.
On the other hand, Japan is the G7 country with the greatest gross debt burden, with a projected debt-to-GDP ratio of 254.6% in 2024.
While debt technically won't follow you abroad, you may suffer several consequences for trying to flee from it: you may be sued and have your wages garnished; your credit score will suffer; you may have to pay taxes on your debt. These are just a few consequences of leaving the country with unpaid debt.
39% of Canadians aged 55-64 have less than $5,000 in savings (-5 pts); 73% have $100,000 or less in savings. More than one in three (36%) women aged 55-64 have no savings at all, compared to one in five (22%) men.
Although many provinces recently recorded surpluses in 2021/22 or 2022/23, debt has risen significantly for both the federal and provincial governments since the 2008/09 recession. Specifically, there was a par- ticularly sharp spike in debt levels in 2020 due to spending associated with the COVID-19 pandemic.
It's highly unlikely the U.S. will ever fully "pay off" its national debt, as governments manage debt by rolling it over, issuing new bonds to pay old ones, and relying on economic growth (GDP) to keep debt manageable relative to revenue, but the growing debt load requires continuous management through budget adjustments, spending cuts, tax increases, or economic expansion to avoid financial instability, notes. The U.S. can borrow in its own currency and maintain its status as a safe asset, but excessive debt risks future economic problems if interest rates rise or investor confidence wanes, say the Brookings Institution and The University of Sydney.
1 United States 21,764,799 2 Euro area 18,075,643 3 United Kingdom 9,837,535 4 France 7,368,685 5 Norway 7,110,029 6 Germany 6,6,91,139 7 Japan 4,687,815 8 Netherlands 4,197,719 9 Luxembourg 3,965,300 10 Italy 2,749,75 https://www.ceicdata. com/en/indicator/norway/external-debt--of-nominal- gdp https://www.gfmag.com/ ...
Consequently, China's stake in U.S. debt has more of a binding than a dividing effect on bilateral relations between the two countries. Even if China wished to “call in” its loans, the use of credit as a coercive measure is complicated and often heavily constrained.
During Prime Minister Justin Trudeau's tenure, federal per-person debt increased by 35.3 per- cent between 2015 and 2022.
The account's annual report for 2018-19, the latest publication available, shows China owes Canada $371 million in loans. Global Affairs Canada said loans were provided periodically to Beijing from the 1980s to the early 2000s to support Canadian exports.
Among the provinces, Newfoundland and Labrador ($20,544) recorded the highest net debt per capita in 2024, followed by Manitoba ($19,327), Ontario ($17,961) and Quebec ($17,856). The lowest net debt per capita was in Alberta ($1,972), followed by British Columbia ($2,871).
Beginning in 1994-95, a dramatic decline in the deficit from its $42-billion peak, turning into a series of surpluses from 1997-98 to the present. In fiscal year 2000-01, the surplus was $17.1 billion, the largest annual surplus in Canadian history.
Key Takeaways
Higher debt adds to the risk of inflationary pressure in both the short- and the long-run, through aggregate demand, inflation expectations, crowding-out of private investment, and worries about fiscal dominance.