A number of provincial governments – including New Brunswick, Nova Scotia, Quebec and Newfoundland and Labrador – say they need to cut funding for public services to eliminate their deficits because of the high cost of servicing their debts.
But the facts don’t support this claim. In fact, debt payment ratios are at or close to recent record lows.
On average, the amount that Canadian governments pay in interest on their debt as a share of their economies is less than half what it was 20 years ago. This is partly because borrowing costs are also close to record lows.
With interest rates expected to stay low for some time, it’s a very good time for governments to invest in growing their economies instead of cutting services.