Annex 2:
Debt management strategy
Introduction
The 2027-28 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 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.
This Debt Management Strategy includes the borrowing plan for 2027-28 and an update to the 2026-27 borrowing plan, released in the Spring Economic Update in April 2026. The 2026-27 borrowing program is projected to be higher for the remainder of the fiscal year, resulting in an upward 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
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.
Outlook for public debt charges
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 $60.2 billion in 2026-27, or 1.8% of gross domestic product (GDP), and increase to 2.2% by 2030-31.
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%. 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 2026-27 borrowing plan
The 2026-27 Debt Management Strategy released in November 2025 and updated in the 2026 Spring Economic Statement included projected financial requirements for fiscal year 2026-27.
Financial requirements for 2026-27 have increased from what was projected in the Spring Economic Statement. As a result, treasury bill issuance will increase. 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 2026-27. The 30-year benchmark date (see Table A2.5 below) has been updated to ensure that the benchmark maturity aligns with its building cycle.
| 2026-27 Budget 2025 | 2026-27 Spring Update 2026 | 2026-27 Budget 2026 Update | Change from Spring Update | |
|---|---|---|---|---|
| Treasury bills | 291 | 268 | 284 | +16 |
|
2-year
|
110 | 110 | 110 | – |
|
5-year
|
80 | 80 | 80 | – |
|
10-year
|
80 | 80 | 80 | – |
|
30-year
|
24 | 24 | 24 | – |
|
Green bond2
|
4 | 4 | 4 | – |
|
Total bonds
|
298 | 298 | 298 | – |
| Total domestic issuance | 589 | 566 | 582 | +16 |
| Share of long bonds (10-year+) to total bonds | 35% | 35% | 35% | - |
| Share of treasury bills to total issuance | 49% | 47% | 49% | +2 ppt |
|
Sources: Bank of Canada; Department of Finance Canada calculations. Note: Numbers may not add up 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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Highlights from the consultations
In May 2026, the Department of Finance Canada and the Bank of Canada held consultations with market participants on the design and operation of the Government of Canada's domestic debt program for fiscal year 2027-28.
Market participants describe the Government of Canada securities market as liquid, resilient, and well-functioning, with strong capacity to absorb a potential increase in issuance. Consistency and predictability remain top priorities for participants. The current mix of tenors for both bonds and treasury bills was broadly viewed as appropriate and well balanced.
Repo markets are generally functioning well; however, elevated issuance across all levels of government continues to create balance sheet capacity challenges for primary dealers. Participants highlighted the growing role of hedge funds in supporting primary bond auctions, expanding market liquidity, and diversifying the investor base.
Projected borrowing activities for 2027-28
2027-28 borrowing program
In 2027-28, borrowing needs are projected to increase from 2026-27. The outlined objectives of raising stable low-cost funding and maintaining a well-functioning market have led the government to maintain a borrowing program broadly consistent with 2026-27, while adjusting issuance across sectors to accommodate higher borrowing needs. The government will continue to monitor economic and fiscal developments and expects to provide an update to the 2027-28 borrowing program around the turn of the fiscal year, alongside a spring fiscal update, as appropriate.
Sources of borrowings
The aggregate principal amount of money to be borrowed by the government in 2027-28 is projected to be $611 billion, up from $587 billion in 2026-27. Of the total borrowings, 72% will be used to refinance maturing debt. This level of borrowing is consistent with the current legislated limit of $2,541 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 2027-28 gross issuance of domestic bonds and treasury bills (i.e., domestic borrowing program) totals $606 billion (see Table A2.3). This reflects requirements to refinance $437 billion of maturing domestic debt, in addition to projected financial requirements of $169 billion, which includes up to $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 CAD 5 billion 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 | 2027-28 |
|---|---|
|
Payable in Canadian currency
|
|
|
Treasury bills1
|
290 |
|
Bonds
|
316 |
|
Total payable in Canadian currency
|
606 |
| Payable in foreign currencies | 5 |
| Total sources of borrowings | 611 |
| Uses of borrowings | |
| Refinancing needs | |
|
Payable in Canadian currency
|
|
|
Treasury bills
|
284 |
|
Bonds
|
153 |
|
Total payable in Canadian currency
|
437 |
|
Payable in foreign currencies
|
5 |
| Total refinancing needs | 442 |
| Financial requirement | |
|
Budgetary balance
|
63 |
|
Non-budgetary transactions
|
|
|
Pension and other accounts
|
-6 |
|
Non-financial assets
|
36 |
|
Loans, investments, and advances
|
|
|
Of which:
|
|
|
Loans to enterprise Crown corporations
|
66 |
|
Other
|
8 |
|
Other transactions2
|
3 |
| Total financial requirement | 169 |
| Total uses of borrowings | 611 |
| Net increase or decrease (-) in cash | 0 |
| Change in other unmatured debt transactions3 | 0 |
|
Source: Department of Finance Canada calculations. Note: Numbers may not add up 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. |
|
| 2026-27 Projected | 2027-28 Budget 2026 | |
|---|---|---|
| Treasury bills | 284 | 290 |
|
2-year
|
110 | 120 |
|
5-year
|
80 | 88 |
|
10-year
|
80 | 80 |
|
30-year
|
24 | 24 |
|
Green bonds1
|
4 | 4 |
|
Total bonds
|
298 | 316 |
| Total domestic issuance | 582 | 606 |
| Share of long bonds (10-year+) to total bonds | 35% | 33% |
| Share of treasury bills to total issuance | 49% | 48% |
|
Sources: Bank of Canada; Department of Finance Canada calculations. Note: Numbers may not add up due to rounding. 1 Actual green bond issuances may be higher or lower than projected, subject to market conditions. |
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Composition of market debt
The total stock of market debt is projected to reach $1,912 billion by the end of 2027-28 (Table A2.4).
| 2024-25 Actual |
2025-26 Estimated |
2026-27 Estimated |
2027-28 Projected |
||
|---|---|---|---|---|---|
| Domestic bonds | 1,163 | 1,275 | 1,426 | 1,589 | |
| Treasury bills | 285 | 286 | 284 | 290 | |
| Foreign debt | 29 | 23 | 28 | 33 | |
| Total market debt | 1,477 | 1,584 | 1,738 | 1,912 | |
| Source: Department of Finance Canada. | |||||
Treasury Bill Program
Budget 2026 anticipates a target stock of $290 billion in treasury bills by March 31, 2028. 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 biweekly auction schedule.
Bond Program
Annual gross bond issuance is projected to be $316 billion in 2027-28, above the $298 billion projected for 2026-27. Bonds are expected to account for 52% of total borrowing, with 33% of the bond program allocated to maturities of 10 years or more, compared with 35% in 2026-27. Minor adjustments to the bond program will support continued benchmark building and market liquidity.
Maturity date cycles and benchmark bond target size ranges
The government will maintain the benchmark target size ranges and the number of planned auctions (see Tables A2.5 and A2.6).
New 30-year benchmarks are expected to be established over an approximately 18-month period. The government will continue to build large and liquid 30-year benchmarks while maintaining flexibility in the timing and maturity dates of new issues.
Following the completion of the December 2057 benchmark, the government began building the next 30-year benchmark maturing in June 2059. This approach supports appropriate benchmark sizes and regular issuance in the sector.
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.
| 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. | |
Green and transition bonds
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.
In October 2026, the government completed its seventh issuance of Canadian-dollar-denominated green bonds, raising $2 billion through a new 10-year offering. The transaction attracted robust investor demand, with environmentally and socially responsible investors accounting for 44% of buyers.
Following its commitment in Budget 2025 to explore the feasibility of a Sustainable Bond Framework, the government will proceed with the development of the Framework and aim to align its approach with the upcoming Made-in-Canada Sustainable Investment Guidelines ("Taxonomy"). The Framework would support the issuance of both green and transition bonds and evolve to incorporate additional economic sectors as the Taxonomy is developed.
Borrowing Authority Act
Under the Parliamentary borrowing authority framework enacted on November 23, 2017, Parliamentary authority is granted through the Borrowing Authority Act (BAA) and Part IV of the Financial Administration Act, which together allow the Minister to borrow money up to a maximum overall amount as approved by Parliament.
On March 27, 2026, Parliament increased the maximum borrowing amount in the BAA to $2,541 billion, from $2,126 billion. This includes amounts borrowed by agent Crown corporations other than from the Government of Canada, and Canada Mortgage Bonds guaranteed by Canada Mortgage and Housing Corporation (excluding amounts purchased by the Government of Canada). The outstanding borrowings subject to the maximum amount is projected to be $2,256 billion as at March 31, 2028. Final amounts subject to the BAA maximum are published in the annual Public Accounts of Canada.
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% of GDP. Foreign currency bond issuance for 2026-27 may be up to an equivalent of CAD 10 billion across two issuances (with the first having taken place in May 2026). Issuance for 2027-28 is expected to be equivalent to $5 billion but could rise to $10 billion depending on the timing of an issuance early in the 2027 calendar year, and may also vary depending on market conditions.
Canada's issuance of foreign currency denominated debt is used exclusively to fund official international reserves. Global bonds have been issued 14 times since the program restarted in 2009, with the most recent one being in May 2026.
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.
Cash management and prudential liquidity
The government maintains sufficient liquidity to meet its operating and debt-servicing requirements, including during periods when access to funding markets may be disrupted. Liquidity is managed to normally cover at least one month of projected net cash flows, including coupon payments and debt refinancing needs.
As part of its cash management framework, the government also conducts cash management bond buybacks ahead of large bond maturities to help manage cash flows and refinancing requirements. The government plans to continue conducting these operations in 2027-28. Further information can be found in Cash Management Bond Buybacks on the Bank of Canada website.
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