Goal 19

Net Debt to GDP - Deep Dive

By 2024 the Province of Nova Scotia’s net debt to GDP ratio will be 30% or less.


Net Debt to GDP data summary graphic
Net Debt to GDP Deep Dive

Historical and Comparative Context

In the first year after the baseline (2012-13), this metric moved away from the target, rising to 38.2 per cent in 2013-14. Then a steady pattern of reduction commenced in 2014-15. The 2016-17 figure was the first to fall back below the baseline level.

Looking back over the longer term, Nova Scotia has not had a net debt to GDP ratio at or below the target figure since 1991-92. After peaking in 1999-00 at 47.2 per cent, there was generally steady progress in reducing the ratio occurred until the financial calamity of 2008-09. From that point until the baseline year, the figure oscillated in the 35 per cent - 39 per cent range.

RBC’s Canadian Federal and Provincial Fiscal Tables (last updated in April 2018) provides debt-to-GDP time series for all provinces, taken from the relevant government’s own fiscal publications.

Looking at the most recent actuals (2016-17), across the ten provinces the top spot goes to Alberta with a figure of 2.8 per cent, while the highest (worst) ratio belongs to Quebec at 46.0 per cent. Nova Scotia ranks sixth among the provinces, up from the eighth spot in the 2012-13 baseline year.

Looking at the change from the baseline year to the most recent actual figures, Nova Scotia had the fourth-best record with an improvement of 1.0 percentage points. Quebec led the way with a drop of 4.9 percentage points; British Columbia and Prince Edward Island also posted decreases. The worst record went to Newfoundland and Labrador whose net debt to GDP ratio rose by 17.6 percentage points.

Forecast Accuracy

In order for the net debt to GDP ratio to improve, growth in GDP must exceed growth in net debt.

In the Government of Nova Scotia’s March 2018 budget, growing budget surpluses are estimated for each year out to 2021-22 and net debt is estimated to grow at a compound rate of approximately 0.8 per cent over the 2017-18 to 2021-22 period. Nominal GDP is estimated to grow by a compound annual rate of 2.9 per cent over the same period. These trends result in the estimated net debt to GDP ratio dropping to 32.1 per cent by 2021-22.

As one broad point of corroboration for the Province’s forecasts, its outlook for growth in real GDP out to 2021 is generally in line with forecasts made by the Conference Board of Canada in its Winter 2018 Metropolitan Outlook.

Several of Canada’s major banks also recently have released provincial economic forecasts. The Province’s figures are not substantially out of line with these private sector forecasts. Interestingly, the most pessimistic forecasts come from RBC in almost all instances, yet they conclude in their research note on the March 2018 budget that the “province appears to be on track to meet its target of a 30 per cent net debt-to-GDP ratio by 2024.”

  Real GDP Growth (%) Forecast   Nominal GDP Growth (%) Forecast 
Year Province Conference
BMO RBC Scotiabank TD Province Conference
BMO RBC Scotiabank TD
2017 1.4 1.3 1.2 1.1 1.6 1.6 3.3     2.4 3.2 3.1
2018 1.0 1.0 0.7 0.8 1.4 1.2 2.9     2.7 3.1 2.8
2019 0.8 1.1 0.9 0.6 1.0 1.0 2.9     2.6 2.9 2.9
2020 1.5 0.9         3.6          
2021 0.5 0.9         2.5          
2022   0.8                    

Changes to the indicator, baseline, or target:

  • No changes were made to the indicator or target; the 2012-13 baseline figure was amended due to revisions in historical nominal GDP data. Other figures have been updated due to the availability of new data.