You are using an older browser version. Please use a supported version for the best MSN experience.

Canada 'fairly close' to a debt crisis, warns Magna founder Frank Stronach

Financial Post logo Financial Post 2022-03-24 Financial Post Staff
Magna International Inc Frank Stronach © Provided by Financial Post Magna International Inc Frank Stronach
Replay Video

Frank Stronach, founder of one of Canada’s largest global companies, says the country is “fairly close” to a public debt crisis and Canadians need to force politicians to rein in spending.

The Magna International Inc founder was speaking on BNN Bloomberg Wednesday after writing an op-ed for the National Post this week.

When asked how close Canada was to a debt crisis similar to the one that threatened the country in the 1990s, Stronach said: “I think fairly close, you know, our debt rises about $400 million every day, right? So that should be a great concern.”

In his op-ed, Stronach wrote that Canada is not immune to the slide toward bankruptcy seen by other countries such as Argentina and Greece.

“On the contrary, at the rate we’re going, we’re moving closer and closer toward that scenario. Canada’s debt-to-GDP ratio in 2021 was approximately 109 per cent — the same percentage as Greece just a few short years before it was bailed out. In other words, the amount of money Canada owes is more than the amount we produce in goods and services. That’s never a good sign,” he wrote.

During the BNN interview, Stronach used an example of how he had to fix the balance sheet of his own company after he took time off to run for the federal Liberal Party in the 1980s. “I stepped away for a year, you know, I was seeking political office and during that time [Magna’s] debt grew by about a billion and a half, which in today’s dollars, it will be about $15 billion. So I put in [measures] and we had the debt paid up five years later. And then we issued [a policy] that the company wasn’t allowed to have any debt. So we were building up cash — when all was said and done, maybe a billion or so of cash in the bank,” he said.

He is calling for Canadians to lobby for legislation that would prevent governments from spending more revenue than they can collect in taxes.

The alternative is an economic collapse that will hurt the lower and middle classes the most as government is forced to cut social benefits, he wrote.

“Every citizen can feel deep down in their bones that the country’s growing mountain of debt is a problem,” Stronach wrote in the National Post.

“Our political leaders are driving us deeper and deeper into debt and we’re getting to the point where we may never be able to repay the debt we owe. It’s high time that we forced our political leaders to stop spending more than they take in.”

AdChoices
AdChoices

More from Financial Post

Financial Post
Financial Post
Loading...

XD Load Error

image beaconimage beaconimage beacon