Canada's Debt: Record High Projected for 2026 | Fraser Institute Study

Canada’s federal debt is projected to reach a record high on a per-person basis by 2026, according to a recent study. The report indicates that the federal gross debt, adjusted for inflation, is expected to reach $2.35 trillion this year under the current government led by Prime Minister Mark Carney.

Debt Levels and Future Implications

This level of debt translates to a projected per-person debt of $56,432, making it the second-highest recorded in Canadian history. The study, which examines debt changes under each prime minister, accounting for inflation and population growth, estimates a 4.2 per cent rise in per-person federal debt in 2026.

Did You Know? Historically, the largest increase in per-person debt occurred under Prime Minister Robert Borden, during the First World War and subsequent economic downturns.

Jake Fuss, director of fiscal studies and author of the report, explained that increasing debt levels will result in a larger portion of government revenue being allocated to interest payments. “The significant increase in federal debt in recent years means more tax dollars will go towards paying interest and future generations are on the hook for today’s spending,” Fuss stated.

Historical Context

The report compared Prime Minister Carney’s government’s debt growth to other leaders who did not preside during times of war or recession. It found that only Mackenzie Bowell, in the late 19th century, oversaw a larger increase in per-person debt under similar conditions.

Conversely, prime ministers like Joe Clark, Lester Pearson, and Paul Martin experienced declines in per-person debt during periods free of major global conflicts or recessions. Louis St. Laurent saw the largest reduction in per-person debt, during a period that included two recessions.

Expert Insight: The findings suggest a potential shift in Canada’s fiscal trajectory, moving away from periods of debt reduction seen under previous leadership during stable economic times, and towards a pattern of increasing debt burden.

Fuss emphasized the importance of focusing on long-term fiscal sustainability, stating, “Today’s deficits represent tomorrow’s taxes.”

Frequently Asked Questions

What is the projected per-person debt in 2026?

The projected per-person debt in 2026 is $56,432.

Which prime minister oversaw the largest reduction in per-person debt?

Louis St. Laurent oversaw the largest reduction in per-person debt, during a period that included two recessions.

How does the current government’s debt growth compare to past administrations?

Only Mackenzie Bowell, in the late 19th century, recorded a larger increase in per-person debt during a period without war or recession.

How might these rising debt levels influence future economic policy decisions in Canada?

Canada’s Debt: Record High Projected for 2026 | Fraser Institute Study