Reduce text size Enlarge text size
Follow us on Twitter Follow us on Facebook Follow us on LinkedIn

  Budget 2020-2021

Debt concepts

Governments in Canada use a number of concepts of debt to measure indebtedness. Each concept has its own rationale. The Québec government provides information on each of these concepts in its budget papers.

Main debt concepts

Gross debtEquation: The gross debt equals debt issued on financial markets plus the government's commitments to state employee retirement plans and other future employee benefits minus the balance of the Generations Fund.

The concept of gross debt does not take into account the government’s assets, for example, fixed assets and investments.

Debt that has been applied to finance the acquisition of assets is much more acceptable than if it was used to finance current expenditure.

Debt representing accumulated deficits Equation: The debt representing accumulated deficits equals the difference between the government’s liabilities and assets.

The debt representing accumulated deficits represents the government’s “bad debt”, i.e. the debt that does not correspond to any asset. It is often said that this is the debt incurred to “pay for the groceries”.

By way of analogy with an individual or a business’s net equity, the debt representing accumulated deficits represents the government’s “negative net equity”.

Other debt concepts

Net debt Equation: The net debt equals the government's liabilities minus the financial assets

The net debt is a concept that can be described as “intermediate”, i.e. it is situated between the gross debt and the debt representing accumulated deficits.

It represents the debt that has been used to finance capital investments as well as the “bad debt” that has been used to finance current expenditure.

Debt of the public sector Equation: The debt of the public sector equals the government's gross debt plus Hydro-Québec's debt plus the municipalities' debt plus the debt of other entities

This debt has been used to finance, among others:

  • Infrastructure
  • Roads
  • Schools
  • Hospitals
  • Hydroelectric dams
  • Water treatment plants