Annex 4:
Debt management strategy
Introduction
The 2026-27 Debt Management Strategy sets out the Government of Canada's objectives, strategy, and borrowing plans for its domestic and foreign debt program and the management of its official international reserves.
The Financial Administration Act (FAA) requires that the Minister of Finance table, in each House of Parliament, a report on the anticipated borrowing to be undertaken in the fiscal year ahead, including the purposes for which the money will be borrowed and the management of the public debt, no later than 30 sitting days after the beginning of the fiscal year.
The Debt Management Strategy is usually included with the Budget as it permits an assessment of the Government of Canada's borrowing needs alongside contextual information included in Annex 1, such as overall financial requirements. Following the government's decision to move to a fall budgeting cycle, starting with Budget 2025, this Debt Management Strategy includes a preliminary borrowing plan for 2026-27, with an update to be provided in advance of the 2026-27 fiscal year. The update will allow for the inclusion of any adjustments to the fiscal or economic environment ahead of the implementation of the 2026-27 Debt Management Strategy.
This Debt Management Strategy also includes an update to the 2025-26 Debt Management Strategy released in July 2025. Overall, the borrowing program is projected to be slightly lower for the remainder of fiscal year 2025-26 resulting in a downward revision to treasury bill issuance.
Objectives
The fundamental objectives of debt management are to raise stable and low-cost funding to meet the financial requirements of the Government of Canada and to maintain a well-functioning market for Government of Canada securities.
The government is committed to managing the debt program in a prudent manner to ensure a balanced debt structure that contributes to maintaining the stability of debt costs and to reducing the risk of the debt portfolio.
Having access to a well-functioning government securities market contributes to lower costs and less volatile pricing for the government, ensuring that funds can be raised efficiently over time to meet the government's financial requirements.
The Debt Management Strategy provides transparency on the government's borrowing plans to support a liquid and well-functioning market for Government of Canada securities and ensures the long-term sustainability of the government's borrowing program.
The government closely monitors financial markets and will adjust issuance if necessary to appropriately respond to shifts in market demand or changes to financial requirements.
Outlook for Government of Canada Debt and Public Debt Charges
As a result of the government's responsible fiscal management, Canada continues to have a desirable fiscal and debt position relative to international peers. Canada continues to have the lowest net debt-to-GDP ratio of G7 countries. Rating agencies cite Canada's effective and predictable policymaking, stable political institutions, economic resilience and diversity, well-regulated financial markets, and monetary and fiscal policy flexibility as drivers of the strong credit profile. Canada is rated AAA (equivalent) by Moody's, S&P, and DBRS, and AA+ by Fitch. The government continues to monitor public debt charges and is committed to maintaining stable and low debt servicing costs. The government now projects that public debt charges will amount to $55.6 billion in 2025-26, or 1.8 per cent of gross domestic product (GDP), and increase to 2.1 per cent by 2029-30.
Despite the rise of interest rates since 2022, the government's debt charges as a share of GDP remain sustainable, near historical lows, and below the historical average over the past 40 years of 3.2 per cent. Maintaining low debt charges as a percentage of GDP reflects the government's prudent debt management in minimising debt servicing costs over recent years.
Public Debt Charges Since 1984
Update to the 2025-26 Borrowing Plan
The 2025-26 Debt Management Strategy released in July 2025 included projected financial requirements for measures announced between the Fall Economic Statement and June 9, 2025.
Financial requirements for 2025-26 have declined slightly from what was projected in the 2025-26 Debt Management Strategy released in July 2025. As a result, treasury bill issuance will decline slightly. Should actual borrowing needs differ between now and the end of the fiscal year, debt issuance will be adjusted initially through changes in the issuance of treasury bills.
The bond program is not forecast to change for the remainder of 2025-26. The 30-year benchmark range (see Table A4.4 below) is being adjusted to ensure that the current benchmark building cycle is maintained.
2026-27 Borrowing Program
In 2026-27, borrowing needs are projected to remain in line with those of 2025-26. The outlined objectives of raising stable low-cost funding and maintaining a well-functioning market have led the government to retain the broad parameters of the 2025-26 borrowing program for 2026-27. To ensure that the market has timely and updated information ahead of the 2026-27 fiscal year, an update will be provided to account for any evolution of the economic or fiscal environment.
Highlights from the Consultations
In September 2025, the Department of Finance and the Bank of Canada held 30 meetings to hear the views of market participants. These consultations, which are an integral part of the debt management process, specifically sought views on issues related to the design and operation of the Government of Canada's domestic debt program for 2026-27.
Overall, market participants viewed the Canadian bond market as functioning effectively despite periodic volatility in global bond markets. Consistency and predictability continued to be important priorities for bond market participants. The current mix of tenors for issuance was broadly viewed as being appropriate and well balanced. It was noted that elevated issuance from all levels of government was leading to some challenges for Canadian dealers with respect to balance sheet capacity.
In the treasury bill sector, market participants also expressed a general preference to keep treasury bill issuance around $300 billon, and satisfaction with the issuance size and mix of products.
Projected Borrowing Activities for 2026-27
The projected sources and uses of borrowings for 2025-26 and 2026-27 are presented in Table A4.1. The comparison of actual sources and uses of borrowings against projections will be reported in the Debt Management Report for the corresponding fiscal year, which is released soon after the Public Accounts of Canada.
Sources of Borrowings
The aggregate principal amount of money to be borrowed by the government in 2026-27 is projected to be $594 billion, down from $614 billion in 2025-26. Seventy-five per cent of the total borrowings will be used to refinance maturing debt. This level of borrowing is consistent with the current legislated limit of $2,126 billion set out in the Borrowing Authority Act.
Actual borrowings for the year may be higher or lower than expected due to economic and fiscal outcomes differing from projections, the timing of cash transactions, and other factors such as changes in foreign reserve needs and Crown corporation borrowings. To adjust for these unexpected changes in financial requirements, debt issuance can be altered during the year, typically first through changes in the issuance of treasury bills. The government may also adjust issuance for bonds in response to larger changes or shifts in market demand.
Uses of Borrowings
Domestic Borrowing
The projected 2026-27 gross issuance of domestic bonds and treasury bills (i.e., domestic borrowing program) totals $589 billion (see Table A4.2). This reflects requirements to refinance $440 billion of maturing debt, in addition to projected financial requirements of $149 billion, which includes $30 billion to fund purchases of Canada Mortgage Bonds. The government's financial requirements are subject to economic conditions and other developments which may lead to revisions.
Foreign Borrowing
The government may also borrow an equivalent of $5 billion CAD in foreign currencies, for the purpose of managing its official international reserves as part of its global bond program (more details below).
| Sources of borrowings | 2025-26 | 2026-27 |
|---|---|---|
Payable in Canadian currency |
||
Treasury bills1 |
293 | 291 |
Bonds |
316 | 298 |
Total payable in Canadian currency |
609 | 589 |
Payable in foreign currencies |
5 | 5 |
| Total sources of borrowings | 614 | 594 |
| Uses of borrowings | ||
| Refinancing needs | ||
Payable in Canadian currency |
||
Treasury bills |
285 | 293 |
Bonds |
186 | 147 |
Retail debt |
0 | 0 |
Total payable in Canadian currency |
471 | 440 |
Payable in foreign currencies |
5 | 5 |
| Total refinancing needs | 476 | 445 |
| Financial requirement | ||
Budgetary balance |
78 | 65 |
Non-budgetary transactions |
||
Pension and other accounts |
-20 | -4 |
Non-financial assets |
6 | 14 |
Loans, investments, and advances |
||
Of which: |
||
Loans to enterprise Crown corporations |
66 | 48 |
Other |
7 | 10 |
Other transactions2 |
1 | 16 |
| Total financial requirement | 138 | 149 |
| Total uses of borrowings | 614 | 594 |
| Net increase or decrease (-) in cash | 0 | 0 |
| Change in other unmatured debt transactions3 | 0 | 0 |
Source: Department of Finance Canada calculations. Notes: Numbers may not add due to rounding. In the uses of borrowings section, a negative sign denotes a financial source. 1 Treasury bills are rolled over, or refinanced, a number of times during the year. This results in a larger number of new issues per year than the stock outstanding at the end of the fiscal year, which is presented in the table. 2 Other transactions primarily comprise the conversion of accrual transactions to cash inflows and outflows for taxes and other accounts receivable, provincial, and territorial tax collection agreements, amounts payable to taxpayers and other liabilities, and foreign exchange accounts. 3 Includes unamortised discounts on debt issues, accrued interest, obligations related to capital leases and other unmatured debt. |
||
| 2024-25 Actual | 2025-26 Estimated |
2026-27 Projected |
|
|---|---|---|---|
| Treasury bills | 285 | 293 | 291 |
| Bonds | |||
2-year |
94 | 120 | 110 |
5-year |
63 | 84 | 80 |
10-year |
63 | 84 | 80 |
30-year |
17 | 24 | 24 |
Green bond2 |
4 | 4 | 4 |
| Total bonds | 241 | 316 | 298 |
| Total domestic issuance | 526 | 609 | 589 |
| Share of long bonds (10-year+) to total bonds | 33% | 34% | 35% |
| Share of treasury bills to total issuance | 54% | 48% | 49% |
Sources: Bank of Canada; Department of Finance Canada calculations. Notes: Numbers may not add due to rounding. 1 Issuance subject to expenditure availability and market conditions. 2 Green bond issuances may be higher or lower, according to market conditions. |
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Composition of Market Debt
The total stock of market debt is projected to reach $1,761 billion by the end of 2026-27 (Table A4.3).
| 2022-23 Actual |
2023-24 Actual |
2024-25 Actual |
2025-26 Estimated |
2026-27 Projected |
|
|---|---|---|---|---|---|
| Domestic bonds | 1,038 | 1,081 | 1,163 | 1,293 | 1,444 |
| Treasury bills | 202 | 267 | 285 | 293 | 291 |
| Foreign debt | 16 | 22 | 29 | 30 | 26 |
| Total market debt | 1,256 | 1,370 | 1,477 | 1,616 | 1,761 |
Treasury Bill Program
The projected borrowing plan for 2026-27 anticipates a target stock of $291 billion in treasury bills by March 31, 2027. The government considers that the 3-, 6- and 12-month tenors appropriately reflect the market demand for short-term government issuance and will maintain its current bi-weekly auction schedule.
2026-27 Bond Program
Annual gross bond issuance is projected to be $298 billion in 2026-27, down from $316 in 2025-26. Issuance has been decreased in the 2-year, 5-year, and 10-year sectors relative to 2025-26. Bond issuance is projected to comprise just over half of total borrowing. Of the bond program, 35 per cent will be in tenors with maturities of 10 or more years, up slightly from 34 per cent in 2025-26.
Maturity Date Cycles and Benchmark Bond Target Size Ranges
The government will maintain the benchmark target size ranges and number of planned auctions, with the exception of the 30-year benchmark which will be adjusted to ensure the current benchmark building cycle is maintained (see Tables A4.4 and A4.5).
| Feb. | Mar. | May | June | Aug. | Sept. | Nov. | Dec. | |
|---|---|---|---|---|---|---|---|---|
| 2-year | 26-34 | 26-34 | 26-34 | 26-34 | ||||
| 5-year | 38-46 | 38-46 | ||||||
| 10-year | 38-46 | 38-46 | ||||||
| 30-year | 28-38 | |||||||
Source: Department of Finance Canada. Note: These amounts do not include coupon payments. |
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| Sector | Planned Bond Auctions |
|---|---|
| 2-year | 20 |
| 5-year | 16 |
| 10-year | 16 |
| 30-year | 8 |
Source: Department of Finance Canada. |
|
The dates of each auction will continue to be announced through the Quarterly Bond Schedule, which is published on the Bank of Canada's website prior to the start of each quarter.
Legislative Proposals to Support Building a New Canadian Economy and Defending Canada
The Borrowing Authority Act specifies the maximum amount of borrowings that can be undertaken by the Government of Canada and agent Crown corporations, as well as Canada Mortgage Bonds that can be guaranteed by the Canada Mortgage and Housing Corporation.
To support the growing investment in Canada's economy and defence capabilities, Budget 2025 proposes to amend the Borrowing Authority Act to increase the maximum amount that can be borrowed from $2,126 billion to $2,541 billion.
Green Bond Program
In October 2025, the government completed its first transaction of 2025-26 via a $2.5 billion dual tranche issuance which saw strong demand from green and socially responsible investors and attracted a mix of Canadian and international investors. $1 billion of a new 30-year green bond was issued, alongside a $1.5 billion re-opening of the 7-year bond first issued in 2025.
Canada's green bond program continues to support the growth of the sustainable finance market in Canada and highlights Canada's investments in climate action and the environment. The government remains committed to regular green bond issuances and will explore the development of a Sustainable Bond Framework that would allow for the issuance of both green and transition bonds to be aligned with Made-in-Canada Sustainable Investment Guidelines ("taxonomy"), and to expand the Framework to incorporate economic sectors as the taxonomy is being developed.
Canada Mortgage Bonds
The Government of Canada, as part of its agenda to catalyse major investments in housing and to build homes at a rate not seen since the Second World War, will increase the Canada Mortgage Bonds (CMB) annual issuance limit from $60 billion to $80 billion, starting in 2026. The increase in this cost-effective funding will solely apply to multi-unit housing.
The government will maintain the current pace of its purchases of CMBs, up to $30 billion annually, to allow the private market full access to the additional issuance.
Management of Canada's Official International Reserves
The Exchange Fund Account (EFA), managed by the Minister of Finance on behalf of the Government of Canada, represents the largest component of Canada's official international reserves. It is a portfolio of Canada's liquid foreign exchange reserves and special drawing rights available to aid in the control and protection of the external value of the Canadian dollar and as a source of liquidity to the government, if needed. In addition to the EFA, Canada's official international reserves include Canada's reserve position held at the International Monetary Fund.
The government borrows to invest in liquid reserves, which are maintained at a level at or above 3 per cent of GDP. Foreign currency bond issuance for 2026-27 may be up to an equivalent of $5 billion CAD but may vary depending on market conditions.
Canada's issuance of foreign currency denominated debt is used exclusively to fund official international reserves. Global bonds denominated in US dollars or euros have been issued 13 times since 2009 with the most recent one being in March 2025.
Further information on foreign currency funding and the foreign reserve assets is available in the Report on the Management of Canada's Official International Reserves and in The Fiscal Monitor.
Bond Buyback Program
The government announced the resumption of the Government of Canada Cash Management Bond Buyback program in November 2022. This treasury management operation is intended to effectively manage the government's cash flows ahead of large bond maturities.
The government plans to continue conducting cash management bond buybacks in 2026-27.
Cash Management
The core objective of cash management is to ensure that the government has sufficient cash available at all times to meet its operating and liquidity requirements.
As part of the prudent management of cash balances, the government reintroduced morning Receiver General auctions on February 21, 2024.
Aside from cash deployed in the morning Receiver General auctions, the government's cash is on deposit with the Bank of Canada, including operational balances and balances held for prudential liquidity. Periodic updates on the liquidity position are available in The Fiscal Monitor.
Prudential Liquidity
The government holds liquid financial assets in the form of domestic cash deposits and foreign exchange reserves to safeguard its ability to meet payment obligations, including coupon and principal payments, in situations where normal access to funding markets may be disrupted or delayed. The government's overall liquidity levels are managed to normally cover at least one month of projected net cash flows, including coupon payments and debt refinancing needs.
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