Many days the media seems to be very confused. They use the term Deficit and Debt interchangeably, and they are not the same thing (in terms of government spending).
In terms of Governments, a Deficit, usually describes how much more was spent than collected in taxes. It is usually measured over a yearly budget. If the deficit is zero, that means the government is taking in funds sufficient to pay for all the spending they have done for the year (this may include payments to service existing debts).
The 2019 federal debt is: $ 683,290,000,000.00 (according to Stats Canada)
Debt, on the other hand for a government is the amount the government owes, in terms of moneys borrowed over a long period of time. Deficit financing (or the accumulation of debt) for Canada started in the late 1960’s.
The federal deficit in 2017 was: $ 7.8 Billion (according to Stats Canada)
I was confused when the CBC had the headline, B.C. posts $1.5B operating debt, they have since revised the title, realizing their mistake. Their tweet remains mistaken:
Your Deficit and Debt
A personal deficit (or surplus), would be something you measure monthly. Did you spend more this month than you made? If you have more or a surplus, then you can put more money on your debt (overall debt), or save the surplus.
Your Debt is the sum total of all the money you owe. Your debt will slow your ability to enjoy your life. You cannot save for:
- Your retirement
- A vacation
- A House
- Your Future
While you can have occasional monthly deficits, the goal is to have a yearly surplus. The other goal is to pay down debt as soon as possible, and that should be the main goal of your surpluses.
Seems straight forward, doesn’t it? Also seems that this isn’t really a topic for the current election.
The Canadian debt is confusing, because several different numbers are reported. As of March 31, 2019, which is the financial year end for the Government of Canada, here are the various numbers, in $millions:
Total interest-bearing debt $1,025,464
Add accounts payable and accrued liabilities 159,707
Federal gross debt 1,185,171
Less financial assets -413,047
Net debt 772,124
Less non-financial assets 86,674
Federal debt (accumulated deficit) used by the CTF debt clock $685,450
We are paying almost $24 billion in interest on the federal debt every year, at historically low interest rates!
When the debt includes all levels of government, Canada’s total gross government debt in 2017 was 90.1% of GDP, or $1.9 trillion, or $52,859 for every man, woman and child in Canada, or $211,436 for a family of 4.