How is the size of the debt measured?

The best way to measure the extent of a government's indebtedness is to compare its debt with the size of its economy. This provides a true gauge of the debt burden. The indicator used to measure the size of the economy is called Gross Domestic Product (GDP). The debt-to-GDP ratio is then calculated.

Briefly, GDP:

  • Represents the total value of goods and services produced in an economy during a given period.
  • Is the source of the revenue the government collects to finance its activities, including payment of debt service.

Comparing a government's debt to GDP is similar to what is done, for example, for a person who wants to borrow to buy a house. The amount of the debt (mortgage, car loan, etc.) is compared to this person's income to assess his or her level of indebtedness.

Change in the gross debt burden and the importance of the Generations Fund

The Generations Fund contributes directly to reducing the debt burden.

Without the deposits made in the Generations Fund, the ratio of gross debt to GDP would be much higher. As at March 31, 2019, the gross debt burden stood at 45.8% of GDP. Without the Generation Fund, it would have stood at 49.8% of GDP, or 4.0 percentage points higher.

This difference means that if the government had not created the Generations Fund in 2006, the gross debt forecast as at March 31, 2019 would be $17.3 billion higher.

Gross debt as at March 31 (percentage of GDP)
  2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
With the Generations Fund 50.1 51.9 52.9 53.2 54.2 54.3 54.3 52.9 51.5 49.6 47.1 47.9 47.1 45.9 45.0
Without the Generations Fund 50.8 52.8 53.9 54.4 55,7 56.1 56.4 55.4 54.5 53.0 52.9 52.2 51.9 51.3 51.0

On a per capita basis, as at March 31, 2019, the gross debt stood at $23 736, compared to $25 798 without the Generations Fund, which represents a difference of $2 062 per capita.

  • In 2018
    • Without the Generations Fund: $26 012
    • With the Generations Fund: $24 367
    • A difference of $1 645
  • En 2023
    • SWithout the Generations Fund: $28 213
    • Without the Generations Fund: $24 908
    • A difference of $3 305