Canada is in the strongest fiscal position among the Group of Seven nations, according to the International Monetary Fund (IMF), offering Prime Minister Mark Carney’s government greater flexibility to invest in key priorities while maintaining debt sustainability.
Speaking in Washington, IMF Western Hemisphere Department Director Nigel Chalk said that “across the Group of Seven, Canada’s probably in the strongest position fiscally,” highlighting the country’s comparatively healthy public finances despite growing global economic uncertainty.
The assessment comes as Ottawa prepares to update its fiscal outlook and faces mounting pressure to increase spending on defence, infrastructure, housing and economic growth initiatives. While critics have expressed concerns over rising deficits and the government’s decision to move away from a declining debt-to-GDP target, the IMF believes Canada retains significant room to maneuver compared with its G7 peers.
The Fund also delivered an upbeat outlook for the Canadian economy, forecasting growth of 1.5 per cent in 2026. That would make Canada the second-fastest growing advanced economy after the United States and among the strongest performers in the G7.
Canada’s fiscal standing has been supported by a relatively low net debt burden compared with other major industrialized nations, a factor long cited by international institutions and credit-rating agencies. Recent revisions by Statistics Canada that increased the estimated size of the economy are also expected to improve key indicators such as debt-to-GDP and deficit-to-GDP ratios.
The IMF’s endorsement is likely to strengthen the government’s argument that it can pursue strategic investments while preserving fiscal stability. It also comes at a time when many advanced economies are struggling with higher debt loads, slower growth and increased spending demands related to security, demographics and economic competitiveness.
Source: Bloomberg, citing comments by IMF Western Hemisphere Department Director Nigel Chalk.