Canada’s combined federal and provincial government debt is projected to reach $2.44 trillion in 2025-26, nearly double the level recorded before the 2008 financial crisis, according to a new study released recently by the Fraser Institute.
The report estimates total net debt across the federal government and all 10 provinces will rise from $1.24 trillion in 2007-08 to $2.44 trillion in 2025-26. Net debt measures total government debt minus financial assets and is commonly used to assess government indebtedness.
The study points to a significant increase in the debt burden carried by Canadian governments over the past 18 years, with combined federal and provincial debt projected to account for 75.4 per cent of the country’s gross domestic product in 2025-26, up from 53.2 per cent in 2007-08.
The findings were published in The Growing Debt Burden for Canadians, 2026 Edition, co-authored by Fraser Institute director of fiscal studies Jake Fuss.
Jake Fuss
“Government debt – federally and in most provinces – has grown substantially over the past 18 years, since just before the 2008 financial crisis, creating serious fiscal challenges for Ottawa and provincial governments in the years ahead,” said Fuss. The report examines debt levels nationally and across the provinces using measures that combine provincial debt with an allocated share of federal debt.
Among the provinces, Manitoba is projected to have the highest combined federal-provincial debt burden relative to the size of its economy in 2025-26. The study estimates combined debt will equal 91.3 per cent of provincial GDP.
The report also highlights changes in provincial debt levels since 2007-08. Alberta recorded the largest increase in provincial government debt as a share of GDP over the period, rising from negative 13.4 per cent of GDP in 2007-08 to 8.1 per cent in 2025-26, an increase of 21.5 percentage points.
Despite that increase, Alberta is projected to maintain the lowest provincial debt burden relative to the size of its economy among all provinces in 2025-26.
On a per-capita basis, the study estimates combined debt levels will vary considerably across the country. Alberta is projected to have the lowest combined debt burden at $42,368 per person, while Newfoundland and Labrador is expected to have the highest at $71,611 per person.
Ontario is projected to record the second-highest combined debt burden, at $63,574 per person.
The report argues that debt accumulation today has implications for future government finances and taxpayers.
“It’s important for Canadians to understand the magnitude of the country’s federal and provincial government debt because deficits and debt today mean higher taxes in the future,” said Fuss.
The Fraser Institute said the study measures net debt as a way of assessing the overall financial position of federal and provincial governments by accounting for both liabilities and financial assets.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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