High Interest Rates Have Turned a Hard Fiscal Anchor to From Advisable to Essential

The Globe and Mail writes on why high interest rates and high debt have left Canadian government finances far more at risk if their fiscal projections fall short. This is the underlying message of Assessing the Potential Risks to the Sustainability of the Government of Canada's Current Fiscal Plan, written by David Dodge and Richard Dion, in collaboration with Robert Asselin, Senior Vice President of Policy at the Business Council of Canada.

Critically, the report says there are several possible scenarios in which the government could miss its projections that would all tip the annual interest costs over 10 per cent of revenue—a threshold above which, would “signal risk of unsustainability.”

Globe and Mail subscribers can read the full article here.