Mike Moffatt | Liberal deficits could hit $25 billion and still honour ‘fiscal anchor’

The Liberal government has shifted away from its initial promise of a $10-billion deficit to a much more flexible fiscal target of up to $25 billion in deficit spending.

The term “debt-to-GDP ratio” has recently come into play, which acts as a “fiscal anchor,” keeping government spending under control. The government calculates its debt-to-GDP ratio by dividing total federal debt by the overall size of the economy, as measured by nominal gross domestic product (GDP).

Assistant Professor Mike Moffatt spoke with The Canadian Press about the Liberals’ new fiscal target.

"The government does have a fair bit of room if what they're trying to do is just see the debt-to-GDP ratio go down," he said.