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I keep hearing how Ontario is in a lot of debt. (around 350 BN in 2018).

Can anyone explain the impact of this increasing debt for Ontario and Canada? Can we just keep taking on more debt to finance our province/country?

closed as off-topic by Chris W. Rea, Nathan L, Philipp, dwizum, Kate Gregory Aug 21 at 13:17

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    I'm voting to close this question as off-topic because it is about government finance, which is specifically off-topic. Please see money.stackexchange.com/help/on-topic – Chris W. Rea Aug 21 at 11:35
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    It's a legitimate question chris! – Jonathan Aug 21 at 12:40
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    @Jonathan The question is not legitimate on this site, because this website is about personal finance and money, not government finance and money. But it could be a legitimate question on economics.stackexchange.com or politics.stackexchange.com. When this question gets closed, you might want to delete it and repost it there. Or you could ask a moderator to migrate it by flagging your own question for moderator attention. – Philipp Aug 21 at 13:13
  • @DJ "the Ontario Liberal government stopped spending anything at all over a year ago?" Because the Liberals were voted out of office, or because the government shut down? – RonJohn Aug 21 at 15:33
  • @Philipp I answered and also voted to reopen, It is extremely easy and always an option to merely modify the original question to add a personal finance slant to it. "I'm looking to buy municipal bonds". And there are non-subjective answers possible to the question even though the issuer is a sovereign political institution. Voting to close is just lazy. you or anyone else, vote to reopen if you feel the same way. – CQM Aug 21 at 22:28
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Debt is primarily used by sovereign institutions to fund infrastructure projects like roads, schools, and general operations. Select groups of people - typically residents and corporations - pay taxes on the interest to that debt.

The debt itself is usually in the form of bonds, which domestic and foreign investors look at and decide if they want to buy. If the investors don't think they will get paid back, then they will not buy new debt.

This begins to severely impacts a sovereign institution's ability to finance itself, because they have overextended, so this is where limitations in how much debt is possible become apparent.

A sovereign dependent area of a bigger country typically does not have the option to keep taking on more debt, like the bigger country can, but they can default on prior debt, and just start taking on new debt again. This is usually a last resort though, and holding debt before any meaningful consequences can continue for a long long time.

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    "they can default on prior debt, and just start taking on new debt again". If they default, then there is a high risk that they will do it again, so investors won't buy the debt (or will only do so in exchange for punitive interest rates). – Martin Bonner Aug 21 at 13:16
  • @MartinBonner its a possibility, but a more likely possibility supported by history is that it will just be different investors buying. – CQM Aug 21 at 22:30

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