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In Depth

Federal Budget 2007

Fiscal Outlook

Ottawa putting $9.2B toward debt

March 19, 2007

CBC News

Ottawa expects to pay down the federal debt by $9.2 billion for the fiscal year that will conclude at the end of March, Finance Minister Jim Flaherty said Monday.

The government said it also plans to put $3 billion a year in each of its next two fiscal years toward debt reduction, bringing the federal debt to $466.3 billion by March 31, 2009.

The Conservatives also said they are on track to bring down the federal-debt-to-gross domestic product ratio in 2012-'13 to 25 per cent, which is a level not seen since the late 1970s.

Flaherty's second budget also anticipates an annual surplus - after putting $3 billion into debt reduction - of $300 million for 2007-'08. No surplus is forecast for 2008-'09 after factoring in the debt payment.

Ottawa said real GDP is expected to come in at 2.3 per cent in 2007 and 2.9 per cent next year, based on current private sector forecasts.

That forecast is not without risks, the government said, noting that recent weakness in Canada's labour productivity could affect the country's growth potential down the road.

Also, there is a risk that recent weakness in the U.S. housing market could affect consumer demand south of the border, and a risk that higher oil prices could push up the value of the Canadian dollar and make Canadian exports less competitive.

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