Toronto | Arab Canada News

Recent financial data has revealed a significant increase in the share of foreign investors in Canadian debt, with their holdings now representing an unprecedented percentage of the total public debt, highlighting an increasing reliance on external financing and raising questions about long-term sovereign risks.

According to a report published by Canadian Mortgage Trends, foreigners currently own more than 30% of Canadian government debt securities, the highest percentage ever recorded. This jump has been driven by several factors, most notably the relative stability of the Canadian economy, the decline in the value of the Canadian dollar, and the increasing demand for high-rated assets.

Analysts believe that this increase reflects ongoing global confidence in the Canadian market, but it puts the Canadian government in a more vulnerable position against fluctuations in global markets, especially in light of increasing political and economic pressures.

Economist Craig Wright stated that "the increasing dependence on external financing may limit Canada's ability to respond flexibly to financial crises, making it more susceptible to shifts in foreign central bank policies, particularly the U.S. Federal Reserve."

This development comes at a time when the federal government faces challenges related to fiscal deficits and slowed growth, which may drive it to issue more sovereign debt to finance public spending, thereby deepening the local economy's dependence on the desires of international investors.

Experts warn that the continuation of this trend without a clear risk management strategy could lead to additional pressure on interest rates and the currency market, emphasizing the need for a careful balance between attracting foreign capital and maintaining economic sovereignty.