
Credit Rating Agency Warns About Ottawa's Fiscal Plan
Shortly after Liberals secured another minority government, a credit rating agency says the spending plans outlined during the campaign will put pressure on Canada's credit profile.
The spending promises made by Prime Minister Mark Carney point to 'considerable fiscal loosening that would exacerbate already expanding fiscal deficits,' Fitch Ratings said in an April 29
Credit ratings are used by investors to help assess the ability of an entity, in this case a country, to repay a debt or meet a financial obligation, such a repaying holders of sovereign bonds.
The Liberals' costed platform promises $129 billion in new spending over the next four years and consecutive deficits which would add nearly $225 billion to the federal debt.
The previous Liberal government under Prime Minister Justin Trudeau had forecasted a $42.2 billion deficit in fiscal 2025-26 in its last Fall Economic Statement. The Carney Liberals have projected a $62.3 billion deficit next year. This exceeds the Trudeau government's fiscal anchor of maintaining the deficit below 1 percent of GDP.
'Canada's credit strengths offer significant headroom to weather a fiscal or economic shock, but increased structural deficits would pressure its credit profile,' said Fitch.
Related Stories
4/30/2025
4/30/2025
The agency said the minority status of the government could lead to actual spending differing from the platform, while adding that 'further fiscal loosening seems inevitable' given the scale of new planned expenditures.
'Canada has experienced rapid and steep fiscal deterioration, driven by a sharply weaker economic outlook and increased government spending during this electoral cycle,' said Fitch.
Carney has
'It's an entirely new government, it's a fundamentally different approach,' he said on April 21. He added that Canada is in the 'worst crisis of our lifetimes,' alluding to U.S. tariff threats, and that his fiscal plan 'meets the moment.'
Several
On the flip side, Fitch had also noted a 'weakened fiscal position' reflecting 'rapid expenditure growth amid a stagnant economy.'
'Top AAA-rated'
Canada's strong credit rating had often been touted by the Trudeau government to defend against Conservative Opposition charges that it's taking on too much debt and that the country's economy is faltering.
'We have been there to invest for Canadians responsibly. We still have one of the top AAA-rated economies in the world. Our fiscal plan is sustainable and responsible,' Trudeau
Before the mini-budget was tabled later that fall, then-Finance Minister Chrystia Freeland was asked by reporters whether exceeding her own fiscal guardrails could risk Canada being downgraded by credit rating agencies.
'We do take Canada's fiscal position seriously. Fiscal sustainability is really important to our government,' she said in December 2024.
A few days later, as she was scheduled to table the Fall Economic Statement (FES), Freeland resigned from cabinet. In her letter of resignation to Trudeau made public, Freeland said the prime minister had informed her he was removing her from finance and that she was still expected to deliver the FES.
In her letter, Freeland also criticized Trudeau for using 'costly political gimmicks' at a time when Canada should be bracing for U.S. tariffs, referring to a two-month sales tax holiday and $250 cheques to Canadians announced at the time.
Freeland's position as finance minister appeared to be under threat shortly after Liberals lost the Toronto-St. Paul's riding in a June 2024 byelection, with anonymous sources from the Prime Minister's Office telling media Freeland was to blame for not effectively communicating the government's economic agenda.
Asked by reporters at the time if she had received assurances from Trudeau that she would stay on as finance minister, she responded, 'I do have the confidence that I need to do my job effectively.'
Freeland also said that as finance minister, 'you have to say 'no' a lot of the time' to proposed spending plans. 'That's how we keep our AAA credit rating,' she said in July 2024.
Freeland lost the Liberal leadership race to her longtime friend Carney. She was appointed as transport minister in Carney's first cabinet in March. The prime minister will be announcing his new cabinet in the coming days.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Hamilton Spectator
16 minutes ago
- Hamilton Spectator
Statistics Canada reports household debt-to-income ratio ticked higher in Q1
OTTAWA - Statistics Canada says the amount Canadians owe relative to their income ticked higher in the first quarter as debt grew faster than income. The agency says the ratio of household credit market debt to disposable income rose to 173.9 per cent on a seasonally adjusted basis, up from 173.5 per cent in the fourth quarter of 2024. In other words, Statistics Canada says there was $1.74 in credit market debt for every dollar of household disposable income in the first quarter. The household debt service ratio — measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income — held steady at 14.40 per cent in the quarter. The results came as the pace of household credit market borrowing slowed to a seasonally adjusted $34.5 billion in the first three months of the year, down from the $41.6 billion in the fourth quarter of 2024. The total seasonally adjusted stock of household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, rose 1.1 per cent to $3.07 trillion in the first quarter of 2025, with mortgages accounting for almost 75 per cent of the total. This report by The Canadian Press was first published June 12, 2025.
Yahoo
39 minutes ago
- Yahoo
Statistics Canada reports household debt-to-income ratio ticked higher in Q1
OTTAWA — Statistics Canada says the amount Canadians owe relative to their income ticked higher in the first quarter as debt grew faster than income. The agency says the ratio of household credit market debt to disposable income rose to 173.9 per cent on a seasonally adjusted basis, up from 173.5 per cent in the fourth quarter of 2024. In other words, Statistics Canada says there was $1.74 in credit market debt for every dollar of household disposable income in the first quarter. The household debt service ratio — measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income — held steady at 14.40 per cent in the quarter. The results came as the pace of household credit market borrowing slowed to a seasonally adjusted $34.5 billion in the first three months of the year, down from the $41.6 billion in the fourth quarter of 2024. The total seasonally adjusted stock of household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, rose 1.1 per cent to $3.07 trillion in the first quarter of 2025, with mortgages accounting for almost 75 per cent of the total. This report by The Canadian Press was first published June 12, 2025. The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Posthaste: Canadian snowbirds now have more reasons than Trump to dump that Florida condo
More Canadian snowbirds are putting their properties in Florida on the market, according to media reports, but unloading them might not be that easy — especially condos. Real estate in the Sunshine State boomed during the pandemic, but now the tables have turned and the condo market is in a serious slump, said Admir Kolaj, a Toronto Dominion economist, in a recent report. Condos play a big role in Florida real estate. There are about 1.5 million of them, accounting for 15 per cent of the state's housing stock, double the national share. Over the past three months, sales have dropped 13 per cent and are down more than 25 per cent from pre-pandemic levels. Prices have fallen about 8 per cent from their peak, said Kolaj. Inventories are climbing, with close to 80,000 condos and townhomes for sale, about 20,000 or 35 per cent more than a year ago. Headwinds buffeting the market include higher interest rates (mortgage rates in the U.S. are still close to 7 per cent), a steep drop-off in domestic migration and economic uncertainty brought on by Donald Trump's tariff war. But Florida condos face their own special set of problems. For one, the Sunshine State is the most expensive in America for homeowners insurance, with condo-specific premiums estimated at double the national average, said Kolaj. Homeowner association fees are also climbing under new stricter regulation on condo inspections and repairs. Buildings older than 30 years — more than half the condos in Florida — must undergo milestone inspections and condo associations have to foot the bill for repairs. Kolaj said in some reported cases where there was the need for major repairs special assessment fees ran into the thousands. 'Given all the headwinds that the condo sector faces, it is no wonder that many owners are choosing to list their units for sale, growing the glut in an already-flooded market,' he said. Canadians are among them. Florida has the largest share of foreign home buyers in America, accounting for 20 per cent of the national total. Twenty-seven per cent of those buyers are Canadian, the highest percentage save for Latin Americans. According to media reports, more of those Canadians are putting their properties on the market, spurred by a weaker dollar, stricter travel requirements and Trump's repeated comments about Canada as the 51st state. Realtors in Florida told CNN earlier this year they have seen a 'sharp uptick' in Canadians looking to sell their homes. 'Some of the clients I have been dealing with want to sell at any cost, even at a loss,' said Share Ross, a realtor based in southeast Florida. Gulf Coast News reported in April that Canadians were making a 'mass exodus' from Southwest Florida, after the U.S. required background checks and fingerprints if they planned to stay more than 30 days in the state. Reduced foreign interest is just one more thing on a long list of challenges facing Florida's condo market, said Kolaj. And owners may have to wait a while for a rebound. There are indications that the state will soften its law on older condos and if other conditions fall into place the condo market could find firmer footing by late 2026, he said. to get Posthaste delivered straight to your labour productivity is finally making gains. As today's chart from BMO Capital Markets shows productivity growth is on the rise and catching up to the growth rate of the United States, though that has been declining. Statistics Canada said last week that productivity grew 0.2 per cent in the first quarter of 2025. That's down from 1.2 per cent growth in fourth quarter of 2024, but it is the first time there have been consecutive quarterly increases since the start of the COVID-19 pandemic. 'The bad news is that productivity could take a hit in the coming quarters as economic growth is expected to slow meaningfully due to trade uncertainty,' said BMO senior economist Shelly Kaushik. Former prime ministers Jean Chretien, Joe Clark and other politicians and experts attend a summit in Calgary to discuss issues including peace and security, trade, energy security and critical minerals, artificial intelligence and quantum computing. Today's Data: United States Producer price index Earnings: Transat AT Inc., Adobe Inc. National Bank's $5 billion megadeal was decades in the making for Dominic Paradis Can Canada repair ties with China? How the two countries could end the tariffs war and expand trade Don't assume further rate cuts from the Bank of Canada, Poloz warns With the cost of homes on the rise, the typical first-time homebuyer in Canada looks different than in the past. The Financial Post takes a look at who is buying and what it takes for them to own their first home. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ Canada home prices are heading into correction territory Just when you thought Toronto's condo market couldn't get any worse … Sign in to access your portfolio