Rising bond yields are putting Ottawa on a costly path when it comes to servicing the debt. Read more.
The net impact on the bottom line would be lower than that, as higher public debt charges are partly offset by some additional revenue for the government that comes with higher interest rates.
It would eclipse, for example, all the gains the government is expecting to make from its much-heralded efforts to find $15 billion in savings in the fiscal framework over the next five years. There’s little sign, after all, that Canada’s access to capital markets is being constrained by its fiscal plan — which is the ultimate test of sustainability.
Prudence is the act of being cautious even if disaster isn’t the most probable scenario — in part because no one really knows what lies ahead. Prudent policy is the foundation of sustainable finances and it’s a bar the Trudeau government was already struggling to hit even before the recent escalation in borrowing costs.
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