Liberals Failed To Lock In Low Interest Rates During Borrowing Binge, And Canada Will Pay The Price

Is there anything the Liberals haven’t completely screwed up?

When the Liberals started to rapidly increase Canada’s debt during the pandemic, Chrystia Freeland defended the move by saying borrowing wasn’t a big deal because interest rates were low.

She wasn’t entirely wrong to say that. Interest rates were indeed very low, and had Freeland and the Liberal government locked in those low rates by selling long-term bonds it would have been a prudent move.

But here’s the thing. Freeland and the Liberals didn’t do that.

Instead, much of the borrowing was short-term.

And now, with interest rates much higher, a huge portion of Canada’s national debt is going to be refinanced at those much higher rates, which will have a significant cost:

“[Math is hard…] One-third of Canada’s debt will be refinanced this year at elevated interest rates, a significant cost to taxpayers that Conservatives argue could have been avoided if the government had issued more of the country’s debt in the form of long-term bonds when rates were lower. Canada has just over $1.4 trillion in debt — more than double the $619 billion owed in the Liberal government’s first year — borrowed using bonds ranging between two and 30 years. But critics point out that the government’s heaviest borrowing, during the COVID pandemic, was done via shorter-term bonds. This year, $414 billion of the national debt will be refinanced. During the pandemic, the Bank of Canada’s central rate was as low as 0.25 per cent; it’s now five per cent.”

This is stunning, and given the long-term damage it will do to our country, it appears to be an error of historic proportions.

Freeland accurately noted the need to lock in low rates, and then didn’t do that.

The level of incompetence is staggering.

At this point, is there anything the Liberals haven’t completely screwed up?

Spencer Fernando


If you value my perspective, I encourage you to contribute what you can through PayPal at the button below.