National Bank of Canada : Federal fiscal update in 10 charts
NA.TO
Published on 04/30/2026 at 08:08 pm EDT
By Warren Lovely, Taylor Schleich & Ethan Currie
In Canada, the mantra of the year-old Carney government has been "spend less, to invest more". Upon the release of Tuesday's budget update, FinMin Champagne declared the government is delivering on this pledge. He's not wrong-spending in this administration's first fiscal year (2025-26) was lower than planned by ~$14 billion. However, that's only one slice of the fiscal update. Looking to 2026-27, we'd propose a revised and slightly more accurate slogan: "spend less to spend more". In contrast with contained expenses last year, spending in 2026-27 is set to rise ~5% with revenue measures (e.g., a gas tax cut) also introduced.
New policy initiatives didn't lead to an overall fiscal deterioration. That's in part because the national GDP profile is stronger than Budget 2025 planned for, which sets the revenue base higher. And if anything, a
C$tln
Projected improvement Actual improvement Budget 2025
+2.0% vs.
Bud25
+3.0%
vs. Bud25
+4.0%
vs. Bud25
Bud25
Actual
Bud25
SEU
2026
NBC
2025
3.40
3.35
3.30
3.25
3.20
3.15
3.10
April 30, 2026 - (Vol. X, No. 51)
Market View
Economics and Strategy
conservative assumption for oil prices and nominal GDP implies the feds may be understating how much will be collected in 2026-27. It hints at a positive fiscal surprise in the fall budget or looked at differently, Ottawa may have more room to spend without needing to post a larger deficit.
In addition to our detailed examination of the fiscal update on Tuesday (here), we offer this supplemental Market View which takes a more visual perspective. We distill some of the key elements of the budget update into 10 charts covering the economy, the fiscal outlook, the debt trajectory and revised borrowing plans. With provincial-federal budget season now officially wrapped up, this won't be our final word on Canadian governments' evolving fiscal outlooks. See our updated Canadian Government Fact Sheet, out today (link).
Federal budget balance: Budget 2025 vs. 2026 Update
C$bln
Budget 2025
2026 update
Chart 3
0
-10
-20
-30
-40
-50
-60
-70
-80
-90
Source: NBC, GoC | Note: SEU refers to Spring Economic Update.
2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31
Source: NBC, GoC
Last year, GDP was much stronger than Budget 2025 anticipated which helps explain the smaller 2025-26 deficit. This fiscal update sees more GDP in 2026 too. However, in part due to a conservative oil price assumption, the feds may be underestimating the level of nominal GDP by 1%+. From 2026-27 on, the fiscal update assumes the deficit will evolve in line with what was envisioned in the fall. However, our economic outlook implies more revenue upside. The conditions are ripe for a positive fiscal surprise in the fall budget… or alternatively, more spending capacity for Ottawa.
+15.7
-15.7
-65.3
C$bln
-65.4
Contributions to revised 2026-27 budget balance: Budget 2025 to 2026 Update
Federal and provincial budget balance: 2026-27 official projection (latest)
0
-10
-20
-30
-40
-50
-60
-70
-80
0.0
-0.5
-0.5
-0.9
-1.1
-1.4
-1.0 -1.9
-1.5
Excl. GF
deposit
-1.4
-3.5
-2.0
-2.5
-3.0
-3.5
BudBal: Budget 2025
Source: NBC, GoC
Eco & fiscal Policy action since
-4.0
developments
Budget 2025
BudBal: 2026 update
% of GDP
GoC Man Sask Que Ont N&L PAvg NS Alta NB BC PEI
Source: NBC, GoC, Prov gov'ts | Note: GoC from Apr-26 SEU, prov from 2026 budgets
Economic/fiscal developments after the fall budget produced an ~$18 billion windfall in 2025-26. With only $6 billion of new initiatives, the bottom line improved by over $11 billion. There's a similar fiscal tailwind set for 2026-27 but that's to be fully deployed through new measures. Hence, the unchanged deficit projection. At 1.9% of GDP, federal red ink is relatively more pronounced than the weighted provincial average. However, the provincial fiscal advantage vs. Ottawa is narrowing even if there's significant unrealized fiscal upside in some provinces (e.g., Alberta).
-2.9
-2.7
-1.9
-1.7
-0.7
Market View
GoC budget balance by component: 2026 Spring Economic Update
C$bln
1
5
6
-4
-11
-5
-26
-59
-59
-55
-58
-61
-41
Captial investments
Operating balance Balance
-32
10
0
-10
-20
-30
-40
-50
-60
-70
-80
-90
Federal debt-to-GDP ratio: Budget 2025 vs. 2026 Update
% of GDP
Budget 2025
2026 Update
46
45
44
43
42
41
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
2028-29
2029-30
2030-31
40
2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31
Source: NBC, GoC
Source: NBC, GoC | Note: Budget 2025 uses Budget 2025 GDP estimates
The fiscal update sees slightly more operational spending in '26-27 than initially planned. Still, the "spend less to invest more" pledge remains evident, as the operational deficit is set to be erased by '28-29 (1 of 2 fiscal anchors). Ottawa's debt burden is improved via much higher nominal GDP (and a bit less borrowing). The key leverage ratio is now rising slower and peaking at a lower level.
General government gross and net debt-to-GDP, 2026
GoC public debt charges (PDC) & 'interest bite' (ratio of PDC vs. total revenue)
225
200
175
150
125
100
75
50
25
0
90 40
% of GDP
Gross (2026)
Net (2026)
C$bln
% of revenue
Public debt charges (L)
Interest bite (R)
80 35
70 30
60 25
50
20
40
30 15
20 10
10 5
1970-71
1974-75
1978-79
1982-83
1986-87
1990-91
1994-95
1998-99
2002-03
2006-07
2010-11
2014-15
2018-19
2022-23
2026-27
2030-31
0 0
CAN DEU G7 GBR USA FRA ITA JPN
Source: NBC, IMF Source: NBC, GoC | Note: Projections from 2025-26 onwards from Apr-26 SEU
Though net debt is set to rise in the coming fiscal year(s), Canada will maintain its fiscal advantage globally, boasting the lowest net debt-to-GDP ratio in the G7. That said, the federal government's
gross debt remains substantial. Despite edging higher, the 'interest bite' will stay well below levels seen in the 1980s and 1990s, even as debt servicing costs continue to reach record highs.
C$bln
Non-Bud Revision
-16 +4 +3
Non-Bud Transactions
Deficit
-21
-2
180
150
120
90
60
30
0
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
2028-29
2029-30
2030-31
-30
Treasury bill share of marketable GoC debt stock
45%
40%
35%
30%
25%
20%
15%
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
10%
Source: NBC, GoC | Note: Stacked column height (red + blue) is net financial requirement Source: NBC, GoC, BoC | Note: 2026-27 FY end projected using DMS
Non-budgetary transactions (NBTs) have become a key ingredient in the borrowing equation lately. Disclosure is limited but borrowing related to CMB purchases and deposits to the Canada Strong
Fund (i.e., the new SWF) are included here. While the '26-27 deficit estimate was unchanged vs. Bud25, NBTs were revised down. This means less borrowing. T-bills will accommodate the lower
need, keeping the bond program steady. However, the bill stock may not be able to fall much further, on a relative or absolute basis. The T-bill share of the GoC debt stock is nearing historic lows.
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National Bank of Canada published this content on April 30, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2026 at 23:48 UTC.