Canada: When Interest Meets Reliable Revenue
Executive Summary
Canada’s fiscal position looks stable on paper. Headline interest costs consume only ~10.6% of federal revenue. But this ratio masks a structural reality: the engine that drove revenue growth has stalled, and the cost of past debt is rising faster than the system can generate new fiscal space.
For decades, population expansion concealed weak per-capita productivity. In 2025, that demographic engine stopped. At the same time, Canada does not fully capture or retain the economic value it produces, due to commodity pricing discounts, single-customer trade concentration, and high-skill outflows. When these factors are applied to the revenue base, the effective denominator shrinks.