Besties, the PBO says Canada’s deficit is about to, like, EXPLODE. From $51B to $68B, with rumours of $100B. Mark Carney is out here swiping the national AmEx while U.S. tariffs drag us down. Is Canada’s credit rating next??
So Canada’s finances are, like, giving full-on messy vibes right now. The Parliamentary Budget Officer (aka the PBO, our national math teacher with receipts) just dropped a report and, omg, it’s not pretty. They’re literally projecting that the federal deficit is gonna balloon from $51.7 billion this year to $68.5 billion next year. Why? Because our economy is slowing down and the government is, like, still swiping the credit card on new programs.
And, babe, this is not just about cute latte money. The PBO says public debt charges — basically, how much we’re paying in interest just to keep our debt afloat — are climbing from 10.7% of revenues in 2024-25 to 13.7% by 2030-31. Compare that with the pre-pandemic low of 7% in 2018-19, and like… yikes. That’s billions being eaten up by interest instead of things Canadians actually need.
But here’s where it gets spicier. Prime Minister Mark Carney has been out here making, like, big promises. In June, at a NATO summit, he pledged tens of billions more for defence spending — aiming for 3.5% of GDP by 2035 — plus another 1.5% on critical infrastructure. And just earlier this month he announced tariff-related supports to help industries bruised by U.S. tariffs. That’s all before his November 4 budget, which will be our first real update since last December.
Meanwhile, U.S. tariffs have been dragging down Canadian exports, slowing the economy, and totally messing with the government’s revenue streams. The PBO projects real GDP growth averaging only 1.2% in 2025 and 2026, with a rebound to 1.8% in 2027. But, like, structurally weaker trade conditions mean our economy will still be 0.5% smaller by 2030 than it should have been. Totally unfair.
And it’s not just the PBO clutching their pearls. The C.D. Howe Institute went full doom-mode this summer and said the deficit could hit $92 billion this fiscal year. Meanwhile, economists echoed the slowdown forecast and politely reminded everyone that if the deficit actually blows past $100 billion — which some rumours are swirling about — investors might start side-eyeing Canada’s credit rating. Like, girl, an economist even said: “We believe the risk of a downgrade remains low. But if, as some rumours suggest, the deficit blows past $100 billion, the budget will face unusually tough scrutiny.”
And let’s not forget, the Parliamentary Budget Officer’s projections don’t even include new campaign commitments (aka the goodies politicians always roll out before an election) or Ottawa’s promise to eventually ramp up defence spending to 5% of GDP by 2035. So, like, the real picture could be even more extra.
Bottom line? Canada’s debt situation is, like, stable-ish if nothing wild happens. But if you add slower growth, higher interest rates, unexpected disasters, and politicians who can’t resist shiny new spending, then yeah — things could go from “manageable” to “omg, where’s my credit limit” really fast.
Where Canada’s vibe check is less “chill fiscal queen” and more “maxed out AmEx with U.S. tariffs breathing down our necks.”
XOXO,
Valley Girl News
Where Canada’s balance sheet is, like, teetering in platform heels, and every new promise feels one step closer to a financial faceplant.
