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Ottawa, October 15, 2002
2002-085

Federal Government Pays Down $8.9 Billion in Debt

Related Documents:

• Annual Financial Report of the Government of Canada - Fiscal Year 2001-2002
• Fiscal Reference Tables - October 2002

John Manley, Deputy Prime Minister and Minister of Finance, announced today that the federal surplus was $8.9 billion for fiscal year 2001-02 – the fifth consecutive year the federal budget has been in surplus.

The entire amount of the $8.9 billion surplus will be used to reduce the public debt. In total, Canada’s public debt has been reduced by $46.7 billion from its peak in 1996-97. The public debt was $536.5 billion at the end of 2001-02.

"The result of prudent planning, responsible fiscal management and a commitment to not return to deficit, has enabled Canada to continue to achieve a budgetary surplus while most other major economies have recorded deficits," said Minister Manley. "The reduction in the debt translates into ongoing interest savings of $3 billion per year. This leaves us more resources available to reduce taxes and fund valued programs and services such as health care and education."

The Minister added that this approach enabled the Government to cope with an economic slowdown and fund a comprehensive package of security measures in response to last year’s terrorist attacks without jeopardizing its five-year $100-billion tax reduction plan, which was introduced in 2000.

Minister Manley announced the debt paydown in the Annual Financial Report of the Government of Canada, which was released today and reviews the Government’s financial performance for the 2001-02 fiscal year.

The report also highlights other key financial results for 2001-02:

• The debt-to-GDP (gross domestic product) ratio is now 49.1 per cent, down sharply from its peak of almost 71 per cent in 1995-96. It is now at its lowest level since 1984-85.

• Market debt has declined to 40.5 per cent of GDP from 57.9 per cent in 1995-96.

• The amount of revenue generated by federal taxes in 2001-02 was 15.9 per cent of GDP, a significant decrease from 16.9 per cent the previous year. This reflects tax savings realized by all Canadians under the Government’s tax reduction plan.

• Program spending increased by 6.1 per cent in 2001-02 to $126.7 billion, $3.9 billion lower than estimated in the December 2001 budget.

The 2001-02 Annual Financial Report of the Government of Canada and Fiscal Reference Tables can be viewed free of charge on the Department of Finance Web site at the address listed below. Printed copies of the documents are available for $16.00 from the Department of Finance Distribution Centre at (613) 995-2855.

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