This is one of a series of reports on what the financial services sector is hoping for in the Feb. 23 federal budget

Ottawa should continue to focus on paying down the $501.5-billion federal debt, says the Canadian Institute of Chartered Accountants.

In its pre-budget submission, the CICA says paying down the debt will give the federal government the ability to maintain fiscal flexibility.

“With a minority government facing increased spending pressures and an annual debt service cost approximating $35 billion, the federal government should not forget that the interest meter is still running at a pace of $95 million each day,” says CICA chairman David Hope.

For every billion dollars paid on the debt, the CICA estimates that the government could save $50 million annually in interest costs.

Last year, interest payments on the federal debt consumed 19.2% of all federal government revenue, down from 21.8% the year before.

“We have seen good progress on paying down the debt, but the total debt still accounts for almost 40% of annual GDP,” Hope says. “The benefits of debt reduction will only be passed on to future generations if these reductions continue, but there remains a long way to go to reach the government’s 25% of GDP target.”

Last year, the federal government made a commitment to improve financial management and accountability by re-establishing the Office of the Comptroller General of Canada, installing professional comptrollers in every department and introducing new corporate governance rules for Crown corporations.

The CICA was pleased to see this, notes Hope. “It’s an important commitment.”