The annual deficit is the one fiscal number the federal government sets directly each year. In 2024-25 Ottawa ran a budgetary deficit of $36.3 billion, or 1.2% of GDP — and once interest on past debt is stripped out, the books were actually back in a small surplus. Measured on the internationally comparable basis, Canada's deficit is the second-smallest in the G7.
Related metrics. This is one part of the federal fiscal picture. See also:
Debt-to-GDP — the federal debt burden relative to the economy, in G7 context.
The companion Debt-to-GDP and Debt servicing charges pages measure the stock of what Canada owes and the cost of carrying it. The deficit is the flow that feeds the stock: every year of red ink adds to the debt, and every dollar of surplus pays it down. It is also the most directly political of the fiscal numbers — the product of choices about spending and taxes that the government makes in each budget. This page reads the deficit two ways: how the federal balance has moved over five decades, and how Canada's overall government balance stacks up against its G7 peers. How large the resulting interest bill has grown — and how it now compares with health transfers, defence, and the other programs it crowds out — belongs to the Debt servicing charges page, and is not repeated here.
Federal deficit, 2024-25
$36.3B
1.2% of GDP, down from $61.9B (2.1%) in 2023-24
Federal primary balance, 2024-25
+$17.1B
A surplus of 0.5% of GDP before interest — the deficit is entirely debt charges
G7 rank, general govt 2024
2nd
Smallest deficit in the G7 after Japan, at −2.1% of GDP
Canada's deficit in the G7
On the measure used for cross-country comparison — the general government balance, which consolidates federal, provincial/territorial, and local budgets — Canada ran a deficit of 2.1% of GDP in 2024, the second-smallest in the G7. Only Japan was tighter. At the other end, the United States borrowed 7.3% of GDP and France 5.8%. Canada's flow position is one of its stronger fiscal cards, even as the cost of servicing its accumulated debt climbs.
General government budget balance, G7, 2024 (% of GDP; negative = deficit)
Source: IMF World Economic Outlook, general government net lending/borrowing (GGXCNL_NGDP), 2024, retrieved June 2026 via IMF DataMapper. US figure cross-checked against FRED series GGNLBAUSA188N (IMF source); UK per WEO October 2025. General government = all levels of government consolidated, and is not comparable to the federal-only figures shown below.
Fifty years of federal deficits — and how much is interest
The federal budgetary balance (the headline "deficit") tells one story; the primary balance — the balance before public debt charges — tells another. The gap between the two lines below is the interest bill. When the red primary line sits above zero while the blue overall line is still negative, it means the government is taking in enough to cover its programs, and the deficit is being driven by interest on debt run up in the past.
Federal budgetary balance vs. primary balance, 1975-76 to 2024-25 (% of GDP)
Source: Department of Finance Canada, Fiscal Reference Tables, October 2025 (Table 2). Primary balance = budgetary balance + public debt charges, computed in the companion workbook. Budgetary balance includes net actuarial losses (the headline measure). 2020-21 reflects pandemic emergency spending.
The takeaway. In 2024-25 the federal deficit was 1.2% of GDP, but debt charges were 1.7% of GDP — so the primary balance was a surplus of about 0.5% of GDP. Put plainly: this year's programs were more than paid for by this year's revenue, and the entire deficit, plus a little more, is interest on the existing debt. That mirrors the mid-1990s, when Ottawa ran primary surpluses even as headline deficits stayed deep, because the interest burden was so heavy.
Findings
Finding 1
The deficit narrowed sharply in 2024-25
The budgetary deficit fell to $36.3B (1.2% of GDP) from $61.9B (2.1%) the year before — back to the 1.2% last seen in 2022-23, and well below the 4–8% deficits of the 1980s and early 1990s.
Finding 2
The whole deficit is now interest
At 1.7% of GDP, public debt charges exceeded the 1.2% deficit, leaving a primary surplus of roughly 0.5% of GDP. The flow problem is the legacy stock, not current program spending — the same pattern that defined the pre-1997 era.
Finding 3
Second-best in the G7
On the comparable general-government measure, Canada's 2.1%-of-GDP deficit in 2024 was the second-smallest in the G7, behind only Japan and far below the United States (7.3%) and France (5.8%).
Finding 4
The cushion depends on rates
The primary surplus is thin and could vanish if borrowing costs rise: with the debt stock far larger than a decade ago, the deficit is more sensitive to interest rates than at any time since the late 1990s. The interest bill's own trajectory is tracked on the Debt servicing charges page.
Sources & methodology
Primary sources
Fiscal Reference Tables, October 2025, Department of Finance Canada — Table 1 (budgetary balance and public debt charges, $M) and Table 2 (same, % of GDP), 1983-84 to 2024-25.
Two different measures, kept separate. The trend chart and the headline figures are the federal budgetary balance (Public Accounts basis), the number Ottawa controls and reports in the budget. The G7 chart is the general government balance (federal + provincial/territorial + local, IMF GFSM basis), the only basis on which countries with different federal structures can be compared. The two are not interchangeable and are never netted against each other.
Primary balance = budgetary balance + public debt charges. It removes interest on existing debt to isolate the stance of current policy. A primary surplus alongside an overall deficit means revenue covers programs and the deficit is interest.
Budgetary balance is the headline measure including net actuarial losses, as presented by Finance Canada. The deficit excluding net actuarial losses was $32.3B (1.1% of GDP) in 2024-25.
Comparability. The federal series runs 1975-76 to 2024-25 — the same span as the companion Debt servicing charges page. A break accompanies the move to full accrual accounting from 1983-84; earlier years are shown as published by Finance Canada, with the break retained. The G7 snapshot uses 2024, the latest common outturn/estimate; 2025 and later are projections.
Companion workbook. The editable series live in Financing_Government-Deficit_Data.xlsx: the federal series with computed primary balance, and the G7 general-government comparison.
Page last reviewed June 2026 · Data current to 2024–25 — the latest published by the Department of Finance Canada