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By 1995 the debt situation was critical. The debt was high and rising, and interest rates had moved sharply higher. There was growing concern that if debt continued to increase institutional investors would require large premiums to lend to Canada or, worse still, would become unwilling to take on any more Canadian debt. In this context, the Government took action to stabilize debt costs and to ensure access to funds in order to reduce risks to the Government's borrowing program and to the fiscal situation. This was part of a larger strategy to put Canada's fiscal house in order.
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