The total amount of Canadian federal and provincial debt outstanding was just under C$900 billion ($643 billion) at the end of 1998, slightly under 100% of GDP. After decades of virtually uninterrupted rise, government indebtedness as a percentage of GDP has begun to decline in response to the much improved fiscal situation for both levels of government and positive economic growth.
The much improved fiscal situation in Canada is having a major impact on the federal government's borrowing requirements in financial markets. Between 1995 and 1997 interest rates across the yield curve fell sharply. Some of this decline can be attributed to increasing confidence in the Bank of Canada's ability to maintain low inflation. However, a large portion clearly reflects reduced risk premiums on Canadian dollar assets due to the determined efforts by governments to address long-standing fiscal concerns.