The Liberal government’s preference for continued deficits and increasing program spending “could increase the vulnerability of public finances to a faster economic slowdown or sudden shock,” according to Fitch Ratings.
Canada has the second largest gross government debt of ‘AAA’ rated countries after the United States, which is ‘incompatible’ with its gold-plated rating, according to the ratings agency.
While the credit agency concedes that increased spending and projected deficits in Canada’s latest budget remain consistent with a falling federal debt burden, the forecast assumes the economy will avoid a recession.