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Proposed changes to the Borrowing Authority Act

Jason Stanton
Published on May 28, 2024

This note provides an overview of the Borrowing Authority Act, as well as information on the proposed changes included in Bill C-69.

The Borrowing Authority Act (BAA) and Part IV of the Financial Administration Act (FAA) together provide the Minister of Finance authority to borrow money up to a maximum amount approved by Parliament. The current maximum stock of outstanding market debt, which is set under section 4 of the BAA and came into force in May 2021, is $1,831.0 billion.[^1] The Government is currently proposing amendments to the BAA to increase the maximum stock of outstanding debt to $2,126.0 billion.

The maximum stock of outstanding debt can be categorized into three components:[^2]

  • Government borrowings, which are made by the Minister on behalf of His Majesty in Right of Canada;

  • Canada Mortgage Bonds (CMBs), which are guaranteed by the Canada Mortgage and Housing Corporation (CMHC); and,

  • Agent Crown corporation borrowings, other than those borrowed from His Majesty in right of Canada and amounts deemed to be borrowings under any Act of Parliament.

Section 8 of the BAA also requires the Minister of Finance to table a report in Parliament every three years, which outlines the amounts borrowed under the three categories above.[^3] It also must provide an assessment to Parliament on whether the maximum amount should be adjusted in the BAA.

In the Borrowing Authority Act - Report to Parliament 2024, the current estimate of the combined market debt stock, as of March 31, 2024, is $1,710.3 billion ($120.7 billion below the current maximum).[^4] In addition, the Minister of Finance assessed that given the financial requirements outlined in Budget 2024, the maximum amount outlined in the BAA should be increased.

Proposed amendments to the BAA have been included in Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, that:

  • Amend paragraph 4(b) to “avoid the double counting of liabilities related to Canada Mortgage Bonds that are guaranteed by the CMHC and have been purchased by the Minister of Finance, on behalf of the Government of Canada, in the calculation of the maximum amount of certain borrowings under that Act”[^5]; and,

  • Amend section 4 to increase the maximum amount that may be borrowed to $2,126.0 billion.[^6]

Budget 2024 did not provide the same level of detail regarding the new proposed maximum borrowing amount as presented in the 2020 Fall Economic Statement (FES). However, using the Government’s current estimate of the combined market debt stock (as of March 31, 2024) and the new proposed maximum borrowing amount in Bill C-69 that avoids double counting CMBs, PBO has estimated the remaining components of the BAA maximum borrowing amount (Table 1). This includes our estimates for net incremental borrowings over three fiscal years, as well as an assumed prudence buffer of 5 per cent, consistent with the approach used in the 2020 FES.
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