Bonds News

Canada sees debt/GDP ratio climbing again

OTTAWA, June 11 (Reuters) - Canada’s ratio of debt to gross domestic product will rise again this year after a long string of declines, the federal government’s budget update showed on Thursday.

The debt-to-GDP ratio, which measures how important the debt is in proportion to the overall economy, will rise to 33.4 percent at the end of the current fiscal year next March, from an estimated 28.8 percent at the end of the 2008/09 year and 29.8 percent the year before.

The ratio had steadily decline from the peak of 68.4 percent in 1995/96.

In the case of the current year, the ratio is being hit by the double whammy of the numerator (debt) going up and the denominator (the economy) going down.

The debt is projected to rise by the C$50.2 billion ($45.6 billion) budget deficit to C$511.7 billion. And for the calendar year 2009 nominal gross domestic product is projected to shrink 4.3 percent to C$1.53 billion.

$1=$1.10 Canadian Reporting by Randall Palmer; Editing by Frank McGurty