Federal Budget 2026: Fiscal Deep Dive
Federal Budget 2026 fiscal deep dive: the deficit path, the operating anchor, debt charges and a $149.5 billion cash requirement in 2026-27.
- Ottawa needs $764.7 billion in cash from 2026-27 to 2030-31, 2.6 times the $288.7 billion of planned deficits and $92.3 billion more than the spring update planned (calculated from Table A1.11 and the spring update's Table A1.10).
- A cut of about $12.4 billion a year to forecast direct program spending, tied to no department or program, is worth $62.0 billion over five years, about nine times the $6.8 billion drop in planned deficits since the spring (calculated).
- Public debt charges rise $25.3 billion from 2026-27 to 2030-31, which absorbs 28.5% of all revenue growth and keeps them above GST revenue in every year (calculated from Tables A1.9 and A1.10).
The Deficit Path
| Billions of dollars | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| Budgetary balance, Spring Economic Update 2026 | -66.9 | -65.3 | -63.1 | -57.7 | -56.2 | -53.2 |
| Economic and fiscal developments | 27.5 | 21.5 | 38.3 | 32.9 | 33.2 | 32.4 |
| Balance before policy actions and measures | -39.3 | -43.8 | -24.8 | -24.8 | -23.0 | -20.8 |
| Policy actions since the spring update | n/a | -3.2 | -3.9 | -1.9 | -0.1 | -0.4 |
| Budget 2026 measures | n/a | -15.2 | -33.8 | -30.9 | -30.4 | -31.8 |
| Budgetary balance, Budget 2026 | -39.3 | -62.3 | -62.5 | -57.6 | -53.4 | -52.9 |
| Budgetary balance (% of GDP) | -1.2 | -1.8 | -1.8 | -1.6 | -1.4 | -1.3 |
| Spring update (% of GDP) | -2.1 | -1.9 | -1.8 | -1.6 | -1.5 | -1.4 |
Source: Budget 2026, Table 1 and Annex 1, Table A1.4. Negative figures are deficits or costs.
The budget projects a deficit of $62.3 billion in 2026-27, the fiscal year now under way (Budget 2026, Annex 1, Table A1.8). That is up from $39.3 billion in 2025-26, a year that ended on March 31 and is shown on preliminary results. It then eases to $52.9 billion in 2030-31 and stays above $50 billion throughout.
The budget says the deficit is "$34 billion lower than previously forecast" over six years (Budget 2026, Economic and Fiscal Overview). Of that, $27.6 billion is 2025-26, the closed year (calculated from Table 1). Over the five planning years, developments add $158.3 billion and new decisions use $151.5 billion (calculated from Table A1.4). Planned deficits fall by $6.8 billion in total (calculated).
The same pattern shows against Budget 2025. That budget expected $78.3 billion for 2025-26 and $65.4 billion for 2026-27 (Spring Economic Update 2026, Annex 1, Table A1.3). The finished year came in $39.0 billion better, and 2026-27 only $3.1 billion better (calculated). The closed year's gain lowers debt but cannot fund new programs. The forward-year gain went to new measures.
Without new decisions, the deficit would have fallen to $20.8 billion by 2030-31 (Budget 2026, Annex 1, Table A1.4). Measures and earlier policy actions are 60.7% of the 2030-31 deficit (calculated from Table A1.4). Budget 2026 measures cost $15.2 billion in 2026-27 and more than double to $33.8 billion in 2027-28.
The second anchor is "maintaining a declining deficit-to-GDP ratio". The ratio rises from 1.2% in 2025-26 to 1.8% in 2026-27, holds there in 2027-28, then falls to 1.3% (Budget 2026, Annex 1, Table A1.8). The budget measures the decline from 2026-27, which leaves the rise outside its test and lets the flat year pass.
Annex 1 says about 70% of the improvement is higher revenue and 30% is lower spending. Revenue projections are up an average of $23.9 billion a year, $15.7 billion of it income tax (Budget 2026, Annex 1). On spending, the budget cuts projected direct program expenses by "approximately $12.4 billion per year over the forecast horizon, before new measures". It calls this "an aggregate forecasting adjustment" that "is not attributed to particular departments, programs, or policy decisions, and it does not change approved funding" (Budget 2026, Annex 1, box "Updating the direct program expense forecast").
Table A1.7 books lower direct program expenses of 1.5, 14.4, 13.6, 15.2 and 17.3 billion from 2026-27 to 2030-31. That row is $62.0 billion over five years, 39.2% of all developments (calculated from Table A1.7). It also carries pension accounting effects that the annex says are offset elsewhere. Without it, the deficit would exceed the spring forecast in every year from 2027-28 (calculated from Tables A1.4 and A1.7). The adjustment follows a year in which direct spending ran $13.6 billion below the spring forecast. In effect, the budget extends one year's underspending across five. The expenditure review analysis covers the savings program.
Operating Balance versus Capital Investment
| Billions of dollars | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| A. Total expenses | 565.7 | 602.6 | 626.8 | 639.1 | 661.1 | 682.1 |
| B. Capital investments (expenses) | 31.1 | 48.8 | 57.0 | 60.9 | 63.1 | 64.0 |
| C. Day-to-day operating expenses | 534.6 | 553.7 | 569.8 | 578.2 | 598.0 | 618.1 |
| D. Budgetary revenues | 526.4 | 540.3 | 564.2 | 581.5 | 607.7 | 629.1 |
| E. Capital investments (forgone revenues) | 6.3 | 9.9 | 16.8 | 16.9 | 14.9 | 14.2 |
| F. Day-to-day operating balance | -2.0 | -3.5 | 11.2 | 20.3 | 24.6 | 25.2 |
| F without row E (calculated) | -8.2 | -13.4 | -5.6 | 3.3 | 9.7 | 11.0 |
| Spring update, row F | -26.4 | -10.5 | -5.2 | 0.9 | 4.5 | 6.1 |
| Total capital investments (accrual) | 37.4 | 58.8 | 73.7 | 77.9 | 78.0 | 78.2 |
| Total capital investments (cash) | 60.2 | 103.3 | 126.0 | 131.4 | 130.9 | 124.7 |
| Capital as % of deficit (calculated) | 95.2 | 94.4 | 117.9 | 135.2 | 146.1 | 147.8 |
Sources: Budget 2026, Annex 1, Tables A1.5, A1.6 and A1.8. Spring row from Spring Economic Update 2026, Annex 1, Table A1.5.
The Capital Budgeting Framework from Budget 2025 counts six kinds of spending as capital, including tax breaks for investment (Budget 2026, Annex 1, Table A1.20). Counting tax breaks decides when the first anchor is met.
That anchor is "balancing operating spending with revenues by 2028-29". The operating balance is -$3.5 billion in 2026-27 and +$11.2 billion in 2027-28, a year early (Budget 2026, Annex 1, Table A1.6). Row E adds back $16.8 billion of estimated forgone revenue in 2027-28, mostly from the Productivity Mega Deduction. The table's note says forgone revenue "is not recorded in the government's financial statements and is therefore not observed directly."
Without the add-back, the balance is -$5.6 billion in 2027-28 and +$3.3 billion in 2028-29 (calculated from Table A1.6). The anchor is met on its original date either way. The year-early claim rests on the add-back. Of the $16.4 billion improvement in the 2027-28 balance since the spring, $10.1 billion is the larger row E (calculated against Spring Economic Update 2026, Table A1.5).
Capital investments cover 94.4% of the deficit in 2026-27 and 117.9% in 2027-28 (calculated from Tables A1.5 and A1.8). Capital transfers double from 2025-26 to $32.4 billion in 2027-28, and capital-focused tax incentives go from $4.2 billion to $17.2 billion (Budget 2026, Annex 1, Table A1.20).
Capital on a cash basis is $103.3 billion in 2026-27, $44.5 billion above the accrual figure (calculated from Table A1.5). Table A1.20 says the cash line includes "defence purchases of items such as vehicles, ships, aircraft, IT systems, and weapons." Those purchases reach the deficit only as amortisation over the assets' useful lives. Defence equipment purchases therefore show up mainly in borrowing and net debt, and much less in the deficit.
Day-to-day operating expenses rise $64.4 billion from 2026-27 to 2030-31, and public debt charges are 39.3% of that growth (calculated from Tables A1.6 and A1.10). Annex 1 says direct program expenses outside capital grow 0.2% a year. Operating restraint falls on departments, while debt charges and indexed transfers keep rising.
Public Debt Charges and Debt
| Billions of dollars | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 |
|---|---|---|---|---|---|---|
| Public debt charges | 53.5 | 60.2 | 67.3 | 73.8 | 78.4 | 85.5 |
| Debt charges (% of GDP) | 1.6 | 1.8 | 1.9 | 2.0 | 2.0 | 2.2 |
| Debt charges (% of revenues, calculated) | 10.2 | 11.1 | 11.9 | 12.7 | 12.9 | 13.6 |
| Federal debt | 1,306.1 | 1,366.5 | 1,429.0 | 1,486.6 | 1,540.1 | 1,593.0 |
| Federal debt (% of GDP) | 40.2 | 39.9 | 40.2 | 40.4 | 40.3 | 40.1 |
| Net debt | 1,451.8 | 1,538.3 | 1,636.3 | 1,731.8 | 1,824.9 | 1,917.6 |
| Non-financial assets | 145.7 | 171.8 | 207.2 | 245.2 | 284.8 | 324.6 |
| Total liabilities | 2,318.3 | 2,484.1 | 2,671.8 | 2,855.3 | 3,003.9 | 3,151.7 |
Source: Budget 2026, Annex 1, Tables A1.8 and A1.10. Federal debt equals net debt less non-financial assets.
Public debt charges climb from $60.2 billion in 2026-27 to $85.5 billion in 2030-31 (Budget 2026, Annex 1, Table A1.10). That is a 42% rise over four years, against 16.4% growth in revenues (calculated). Charges take 11.1% of revenues this year and 13.6% in 2030-31 (calculated). They already exceed the $57.4 billion Canada Health Transfer. By 2030-31 they are $20.4 billion more than all GST revenue (calculated from Tables A1.9 and A1.10).
Annex 2 says debt charges remain "below the historical average over the past 40 years of 3.2%" of GDP. The direction is up. At 2.2% of GDP in 2030-31, charges reach their highest share since 2006 in the budget's own series (Budget 2026, Annex 2, Chart A2.1). The forecast is $4.6 billion higher than the spring's for 2030-31.
Federal debt rises $286.9 billion from 2025-26 to 2030-31, to $1,593.0 billion (calculated from Table A1.8). The ratio stays between 39.9% and 40.4% of GDP, and the budget has no debt anchor. The ratio is 1.6 points below the spring forecast for 2026-27. An estimate from the GDP each document implies puts about 0.6 points of that gap down to higher nominal GDP, mostly prices (calculated).
Net debt rises faster than federal debt. Federal debt in 2030-31 is $36.4 billion lower than the spring projected, but net debt is $54.9 billion higher (calculated against Spring Economic Update 2026, Table A1.7). The gap is $91.3 billion more of non-financial assets such as ships, aircraft and vehicles. Federal debt subtracts those assets, so buying them does not raise the headline measure. The borrowing to buy them still happens. See the comparison with the spring update.
Revenue Outlook
| Billions of dollars | 2025-26 | 2026-27 | 2027-28 | 2030-31 | Change, 2026-27 to 2030-31 (calculated) |
|---|---|---|---|---|---|
| Personal income tax | 247.7 | 258.7 | 270.8 | 309.3 | 50.6 |
| Corporate income tax | 104.2 | 102.7 | 97.1 | 100.2 | -2.5 |
| Non-resident income tax | 14.5 | 14.8 | 15.0 | 15.8 | 1.0 |
| Goods and Services Tax | 51.8 | 51.5 | 57.4 | 65.1 | 13.6 |
| Customs import duties | 10.3 | 11.1 | 13.4 | 8.7 | -2.4 |
| Other excise taxes and duties | 13.1 | 7.7 | 12.9 | 13.1 | 5.4 |
| Other taxes (Pillar Two) | 0.0 | 2.7 | 1.9 | 2.1 | -0.6 |
| Employment Insurance premiums | 32.5 | 34.3 | 35.5 | 39.7 | 5.4 |
| Enterprise Crown corporations | 13.1 | 13.0 | 16.0 | 26.1 | 13.1 |
| Other programs | 32.9 | 37.0 | 36.3 | 40.5 | 3.5 |
| Net foreign exchange and investment returns | 6.2 | 6.9 | 7.9 | 8.6 | 1.7 |
| Total budgetary revenues | 526.4 | 540.3 | 564.2 | 629.1 | 88.8 |
| Total revenues (% of GDP) | 16.2 | 15.8 | 15.9 | 15.8 | n/a |
Source: Budget 2026, Annex 1, Table A1.9. Totals may not add due to rounding.
Revenues rise 2.6% in 2026-27, to $540.3 billion, while the survey has nominal GDP up 5.6% in calendar 2026 (revenue growth calculated from Table A1.9, GDP from Table A1.2). Three tax measures hold the year down. The fuel excise extension costs $2,870 million, the groceries benefit supplement $4,055 million and the write-off $2,015 million. Together that is $8,940 million in 2026-27 (calculated).
Personal income tax supplies $50.6 billion of the $88.8 billion revenue growth to 2030-31, or 57.0% (calculated from Table A1.9). Corporate income tax falls to $97.1 billion in 2027-28 and 2028-29. In 2030-31 it is still $4.0 billion below 2025-26 (calculated). Annex 1 calls the write-off a "shift in the timing of deductions". Because it is permanent, the cost does not reverse inside the horizon. It is $9,255 million in 2030-31 alone (Budget 2026, Chapter 1 cost table).
Enterprise Crown corporation revenue doubles to $26.1 billion by 2030-31, on Crown profits and growing holdings of Canada Mortgage Bonds (Budget 2026, Annex 1). That is 14.8% of revenue growth (calculated). The loans that earn it sit outside the deficit, while the borrowing to fund them adds to debt charges. The Crown corporations analysis covers the lending.
Customs duties peak at $13.4 billion in 2027-28 and drop to $8.1 billion in 2028-29. The budget assumes counter-tariffs on U.S. goods stay "in place into 2027-28", and the forecast falls after that (Budget 2026, Annex 1). Of the $14.1 billion assessed since March 2025, 63.1% has been remitted or relieved (calculated from Annex 1). Other program revenues rise 12.5% on interest and penalties from growing taxes receivable. The annex also raises the allowance for doubtful accounts on those receivables. This suggests part of the revenue gain is booked on tax debts the government does not expect to collect in full.
Expense Outlook
| Billions of dollars | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2030-31 |
|---|---|---|---|---|---|
| Old Age Security program | 82.7 | 89.4 | 95.2 | 99.9 | 109.5 |
| Employment Insurance benefits | 28.8 | 32.9 | 34.3 | 32.9 | 35.0 |
| Canada Child Benefit | 30.1 | 31.2 | 32.3 | 33.5 | 35.7 |
| Major transfers to persons | 141.7 | 153.4 | 161.8 | 166.3 | 180.2 |
| Canada Health Transfer | 54.7 | 57.4 | 60.3 | 62.9 | 67.7 |
| Canada Social Transfer | 17.4 | 17.9 | 18.5 | 19.0 | 20.2 |
| Equalization | 26.2 | 27.2 | 28.4 | 29.6 | 31.9 |
| Territorial Formula Financing | 5.5 | 5.8 | 6.3 | 6.7 | 7.2 |
| Health agreements | 4.3 | 4.3 | 4.3 | 2.5 | 2.5 |
| Canada-wide early learning and child care | 7.9 | 10.3 | 11.0 | 8.2 | 8.8 |
| Major transfers to other governments | 110.8 | 116.9 | 122.8 | 122.5 | 131.2 |
| Direct program expenses | 246.0 | 272.4 | 274.7 | 279.4 | 288.8 |
| Total program expenses | 498.5 | 542.7 | 559.3 | 568.3 | 600.2 |
| Public debt charges | 53.5 | 60.2 | 67.3 | 73.8 | 85.5 |
| Total expenses | 565.7 | 602.6 | 626.8 | 639.1 | 682.1 |
Source: Budget 2026, Annex 1, Table A1.10. Some transfer lines are not shown.
Program expenses rise $44.2 billion in 2026-27, or 8.9% (calculated from Table A1.10). Direct program expenses rise 10.7% (calculated). EI benefits rise 14.1%, which Annex 1 links to tariff measures that widened access, and Old Age Security rises 8.0%.
After 2026-27, departmental spending growth slows sharply. Direct program expenses rise $16.4 billion over four years, 1.5% a year (calculated from Table A1.10). The Overview's claim that direct spending growth slows to "less than 2%" is measured from a base that has just jumped. Program expenses fall from 15.8% of GDP to 15.1%.
Transfers to persons grow 4.1% a year, to $180.2 billion (Budget 2026, Annex 1). Old Age Security adds $20.1 billion of that (calculated).
Transfers to other governments grow 2.9% a year, but dip from $122.8 billion to $122.5 billion in 2028-29, the only fall in the series (Budget 2026, Annex 1, Table A1.10). Health agreements drop to $2.5 billion as home care, mental health and long-term care transfers expire. Child care falls to $8.2 billion as a $5.4 billion two-year top-up ends. Provinces face both cliffs in the same year. The provinces and territories analysis has the detail.
The tariff support package and several training measures add $3.9 billion in EI costs over five years (Budget 2026, Annex 1). The budget books $2,188 million of projected EI premium revenue over the same five years to recover part of it (Budget 2026, Chapter 3 cost table). The EI account's cumulative deficit is $17.9 billion in 2027 and does not close until 2034 (Budget 2026, Annex 1, Chart A1.2). This suggests workers and employers will pay for the tariff response through premiums for years.
Assumptions
| Budget 2026, 2026 | Spring update, 2026 | Budget 2026, 2027 | Spring update, 2027 | Budget 2026, 2026-2030 average | Spring update, 2026-2030 average | |
|---|---|---|---|---|---|---|
| Real GDP growth (%) | 1.0 | 1.0 | 1.7 | 1.9 | 1.7 | 1.7 |
| GDP inflation (%) | 4.6 | 3.1 | 1.9 | 1.8 | 2.4 | 2.1 |
| Nominal GDP growth (%) | 5.6 | 4.1 | 3.7 | 3.7 | 4.1 | 3.9 |
| Nominal GDP level ($ billions) | 3,427 | 3,378 | 3,552 | 3,502 | n/a | n/a |
| CPI inflation (%) | 2.8 | 2.5 | 2.2 | 1.9 | 2.2 | 2.1 |
| Unemployment rate (%) | 6.6 | 6.5 | 6.2 | 6.2 | 6.1 | 6.2 |
| 3-month treasury bill (%) | 2.3 | 2.2 | 2.6 | 2.5 | 2.6 | 2.5 |
| 10-year bond (%) | 3.6 | 3.4 | 3.8 | 3.6 | 3.7 | 3.6 |
| WTI oil (US$ per barrel) | 85 | 73 | 79 | 66 | 74 | 69 |
| Exchange rate (US cents per C$) | 72.1 | 73.7 | 72.4 | 75.4 | 72.9 | 75.3 |
Source: Budget 2026, Annex 1, Table A1.2, with spring figures restated. Calendar years.
The forecast averages the September 2026 survey of 13 private sector forecasters (Budget 2026, Annex 1). Real growth averages 1.7% for 2026 to 2030, the same as in the spring. The gain is in prices. GDP inflation for 2026 is 4.6% against 3.1%, on oil at US$85 a barrel against US$73. That lifts nominal GDP by $48 billion a year on average (Budget 2026, Annex 1, Table A1.2). Annex 1 credits the revenue gain to higher prices, mainly for oil, and to the second-quarter rebound. Oil falls back to US$69 in 2028, close to the spring's US$66, but nominal GDP stays $45 billion to $50 billion higher every year (Budget 2026, Annex 1, Table A1.2).
Two later developments push in opposite directions. Oil has traded around US$100, and Finance says WTI could average about US$87 in 2026 and US$89 in 2027 (Budget 2026, Annex 1). That would raise revenue. The Bank of Canada also raised its policy rate by 25 basis points in October, earlier than forecasters expected. That would raise debt charges.
The survey has 2.0% real growth in 2028 and 2029, above the Parliamentary Budget Officer's 1.7% and 1.8% and the IMF's 1.7% (Budget 2026, Annex 1, Table A1.1). If 2028 growth came in at the PBO's figure, then Table A1.16 implies a balance about $1.7 billion weaker in the first year (calculated, scaled from the one-point sensitivity).
Sensitivities and Scenarios
| Billions of dollars, effect on the balance | Year 1 | Year 2 | Year 4 |
|---|---|---|---|
| Real GDP growth 1 point lower for one year | -5.6 | -5.9 | -6.4 |
| GDP inflation 1 point lower for one year | -2.4 | -2.9 | -1.1 |
| All interest rates 100 basis points higher, sustained | -4.1 | -5.6 | -7.9 |
| Higher expenses from the rate rise, before revenue offsets | 7.2 | 10.0 | 14.7 |
Source: Budget 2026, Annex 1, Tables A1.16, A1.17 and A1.18.
The interest-rate sensitivity grows with time, from $4.1 billion in year 1 to $7.9 billion in year 4 (Budget 2026, Annex 1, Table A1.18). By year 4 it exceeds the effect of a one-point drop in real growth. Annex 1 says maturing debt is refinanced at higher rates and future borrowing costs more. Of 2027-28 borrowing, 72% refinances maturing debt (Budget 2026, Annex 2).
| Deficit, billions of dollars | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 | Debt-to-GDP 2030-31 (%) |
|---|---|---|---|---|---|---|
| Budget 2026 baseline | 62.3 | 62.5 | 57.6 | 53.4 | 52.9 | 40.1 |
| Higher investment scenario | 62.1 | 61.4 | 54.9 | 49.0 | 46.3 | 39.2 |
| Global supply disruptions scenario | 62.4 | 66.1 | 60.4 | 55.7 | 55.1 | 40.5 |
Source: Budget 2026, Annex 1, Charts A1.5 and A1.6. Deficits are shown as positive numbers.
The higher investment scenario assumes a stronger response to the write-off and to AI, with real growth 0.3 points a year above the survey. The balance improves by $3.0 billion a year on average (Budget 2026, Annex 1). The global supply disruptions scenario assumes a longer Middle East conflict and tighter financial conditions. The economy contracts in late 2026 and unemployment peaks at 6.7%. The deficit is $2.2 billion a year larger on average and peaks at $66.1 billion in 2027-28.
On these figures, the scenarios lean favourable. The upside improves the balance by $15.0 billion over five years, and the downside costs $11.0 billion (calculated from Chart A1.5). The downside's average cost is smaller than the first-year effect of a one-point growth shock. Annex 1 says higher oil prices in that scenario lift GDP inflation and soften the hit.
The downside still tests both anchors. If it occurs, the deficit rises from $62.4 billion to $66.1 billion in 2027-28 while nominal GDP grows about 3.4%. The deficit ratio would rise from about 1.82% to 1.87%, a break in the year-by-year decline (calculated, approximate, using calendar-year GDP from Table A1.12). The operating anchor holds in 2028-29 with $17.5 billion to spare, or $0.5 billion without the forgone-revenue add-back (calculated).
Neither scenario tests the forecast cut. If departments spend their approved funding on the spring timetable, the $12.4 billion a year is 5.6 times the downside's average cost (calculated). This suggests it is the largest risk to the deficit path, and the budget does not model it.
The long-term projection puts federal debt at 18.6% of GDP in 2060-61 (Budget 2026, Annex 1, Table A1.15). Interest rates one point higher give 30.0%, and one point lower give 9.9%.
Debt Management
| Billions of dollars | 2026-27, Budget 2025 plan | 2026-27, spring update | 2026-27, Budget 2026 update | 2027-28 plan |
|---|---|---|---|---|
| Treasury bills | 291 | 268 | 284 | 290 |
| 2-year bonds | 110 | 110 | 110 | 120 |
| 5-year bonds | 80 | 80 | 80 | 88 |
| 10-year bonds | 80 | 80 | 80 | 80 |
| 30-year bonds | 24 | 24 | 24 | 24 |
| Green bonds | 4 | 4 | 4 | 4 |
| Total bonds | 298 | 298 | 298 | 316 |
| Total domestic issuance | 589 | 566 | 582 | 606 |
| Long bonds (10-year+) share of bonds | 35% | 35% | 35% | 33% |
Source: Budget 2026, Annex 2, Tables A2.1 and A2.3.
The financial requirement is $149.5 billion in 2026-27, 2.4 times the deficit (calculated from Table A1.11). The difference is mostly $59.1 billion of loans to enterprise Crown corporations and $26.1 billion of net investment in non-financial assets (Budget 2026, Annex 1, Table A1.11). Crown loans include "the up-to $30 billion in annual purchases of Canada Mortgage Bonds". Over five years, Crown lending totals $260.2 billion, 34.0% of the cash requirement (calculated from Table A1.11).
Gross borrowing is $611 billion in 2027-28, up from $587 billion in 2026-27 (Budget 2026, Annex 2). Of that, $442 billion refinances maturing debt and $169 billion meets the financial requirement. Loans to Crown corporations are 39.1% of that requirement (calculated from Table A2.2).
The 2026-27 plan adds $16 billion of treasury bills because requirements are higher than in the spring. For 2027-28, bonds rise to $316 billion, and the whole increase is at two and five years. The long-bond share falls from 35% to 33% (Budget 2026, Annex 2, Table A2.3). This suggests the debt will reprice faster when rates move, the exposure Table A1.18 measures.
Market debt grows from $1,477 billion in 2024-25 to $1,912 billion in 2027-28, up 29.5% in three years (calculated from Table A2.4). Parliament raised the Borrowing Authority Act limit to $2,541 billion on March 27, 2026. Borrowings subject to it reach a projected $2,256 billion by March 31, 2028 (Budget 2026, Annex 2). That leaves $285 billion of room, under two years at the 2027-28 requirement (calculated). This suggests the government will need a higher limit within the planning horizon.
The "other" loans, investments and advances line jumps from $5.2 billion to $13.4 billion in 2026-27, and the budget does not say why (Budget 2026, Annex 1, Table A1.11). It also does not say where the Canada Strong Fund's initial $25 billion over three years is booked.
Canada keeps AAA ratings from three agencies and AA+ from Fitch (Budget 2026, Annex 2). Finance will develop a Sustainable Bond Framework for green and transition bonds.
Asked For vs. Delivered
| Ask or expectation | Source | In the budget? |
|---|---|---|
| Use extra revenue to cut the deficit and debt | C.D. Howe Institute, National Post, Oct 27 | Partly. Measures used $151.5 billion of the $158.3 billion five-year gain (calculated). |
| Cut federal spending by about $60 billion a year | CTF, National Post, Sep 16, Western Standard, Sep 21, FINA, Oct 5 | Went the other way. Program expenses rise $44.2 billion in 2026-27 (calculated). |
| Stop borrowing and control debt and interest costs | CTF, Western Standard, Sep 21, Toronto Sun, Sep 21 | Went the other way. Gross borrowing rises to $611 billion in 2027-28. |
| A serious fiscal anchor, less debt, a cautious budget | Kevin Lynch, Financial Post, Nov 4 | Went the other way. No new anchor, and debt rises every year to $1,593.0 billion. |
| Bring down debt-to-GDP and deficit-to-GDP ratios | Conservative Party (Pierre Poilievre letter), CTV News Channel, Nov 1 | Partly. The deficit ratio falls from 2026-27, but debt reaches 40.4% in 2028-29. |
| Transparent anchor, gradual cut in debt-to-GDP | Jean-Denis Garon, Bloc Québécois, CPAC, Nov 4 | Partly. Debt-to-GDP peaks at 40.4% in 2028-29 and eases to 40.1% by 2030-31. |
| Show how higher borrowing produces measurable results | IFSD, Toronto Star, Nov 5 | Partly. It says the write-off could lift real GDP about 0.5% by 2030. |
| PBO expected a $70.2 billion deficit in 2027-28 | PBO, Toronto Sun, Oct 20, National Post, Oct 20, Hill Times, Oct 22 | Not in this budget. The budget projects $62.5 billion for 2027-28. |
| Operating budget balanced a year early | Mark Carney, Globe and Mail, Sep 15, Financial Post, Sep 24 | Delivered. A $11.2 billion surplus in 2027-28, counting forgone revenue. |
| A deficit much lower than projected earlier in the year | National Post, Nov 5 | Partly. The 2025-26 deficit fell $27.6 billion, but 2026-27 only $3.0 billion. |
| Higher revenue creating new fiscal room | Hill Times, Oct 22, National Post, Oct 27 | Delivered. Revenue is up $23.9 billion a year on average. |
| Deficits around $60 billion across the projection | Pedro Antunes, Signal49 Research, CTV News Channel, Nov 4 | Delivered. Deficits run from $52.9 billion to $62.5 billion. |
Asks compiled by Stephen Taylor's AI Public Affairs Toolset, September 15 to November 5, 2026.
Net Assessment
Budget 2026 turns an oil and price windfall into new spending and tax relief. New decisions use $151.5 billion of a $158.3 billion five-year improvement (calculated). The smaller deficit the government headlines is mostly 2025-26, a year that has closed.
The plan's main weakness is the spending forecast cut. About $12.4 billion a year comes off forecast direct spending with no program named and no funding changed. Without it, deficits would exceed the spring forecast from 2027-28. The downside scenario does not test it.
The anchors hold on the budget's own definitions. The operating balance clears zero a year early only by counting $16.8 billion of forgone tax revenue as revenue. The deficit ratio declines only when measured from 2026-27, and in the downside scenario it would rise in 2027-28.
The cash picture is more demanding than the deficit. The government needs $764.7 billion over five years, a third of it for Crown lending (calculated). Debt charges grow 42% to $85.5 billion and take a larger share of revenue every year. Shorter bond issuance and a borrowing limit with under two years of room make interest rates the risk to watch.