The calculation

Divide the chosen debt measure by nominal gross domestic product, then multiply by 100. If federal debt is $1.25 trillion and nominal GDP is $3.0 trillion, the ratio is about 41.7 per cent.

The label must name the numerator: federal accumulated debt, federal net debt, general-government net debt or gross debt. Each produces a different ratio.

How the ratio can fall while debt rises

Suppose debt grows by 2 per cent while nominal GDP grows by 5 per cent. The dollar debt is higher, but debt represents a smaller share of the economy. Inflation and real economic growth both affect nominal GDP.

The reverse can happen in a recession: GDP may shrink while debt rises, causing the ratio to jump quickly.

What the ratio cannot answer

  • Whether a particular program is worthwhile.
  • Whether interest costs are affordable at future rates.
  • How debt is distributed across federal and provincial governments.
  • Whether the accounting measure is comparable with another country.
  • How much fiscal room exists under a specific policy objective.

Primary sources

Use the official publications below for the latest figures and accounting details.

Editorial note: This page explains public accounting concepts and is not a recommendation for or against any political party, tax, program or borrowing decision.