Wishful Thinking

In fact, the government forecasts that the rate of reduction in the province’s debt-to-GDP ratio will approximately triple in the final eight years of its timeline, rising to 1.1 percentage points annually. [...] The first section describes Ontario’s debt-reduction plan, drawing attention to the sharp contrast between the slow pace of reduction expected in the im- mediate future and the rapid pace of reduction projected in the medium- to-distant future. [...] The next section describes costs and risks of the govern- ment’s plan, including its continued debt accumulation in the early years and the lengthy time horizon envisioned for a return to pre-recession debt levels, which leaves the province vulnerable to the effects of another eco- nomic shock. [...] For starters, the asymmetry of the debt re- duction plan is striking; while debt accumulation was rapid on the way up, the pace of debt reduction is much slower on the way back down. [...] Indeed, when the government’s target date of 2029/30 arrives, the province will be 20 years removed from the end of the 2008/09 recession that precipitated the rapid run-up in debt the province is now attempting to address.