Chapter 4: Borrowing and Debt Management

Introduction

Ontario’s borrowing program is primarily used to fund deficits, refinance maturing debt, and make investments in capital assets, while minimizing interest costs.

Ontario’s long-term borrowing requirement for 2025–26 is now forecast to be $42.5 billion, $0.3 billion lower than what was forecasted in the 2025–26 First Quarter Finances.

The net debt-to-GDP ratio is now forecast to be 37.7 per cent in 2025–26, compared with the forecast of 37.9 per cent in the 2025 Budget. Ontario’s net debt-to-GDP ratio fell to a 13‑year low last year, and Ontario’s plan keeps it below target levels over the medium-term outlook.

The net debt-to-operating revenue is forecast to be 208 per cent in 2025–26, compared with the forecast of 211 per cent in the 2025 Budget. The 191 per cent for 2024–25 is the lowest level since 2010–11. Ontario has demonstrated its ability to bring this ratio below its 200 per cent target and achieved this consecutively in 2023–24 and 2024–25. While the current economic environment will temporarily raise the level of this ratio, the government remains committed to, and has proven it has the capability to, re-attain this target.

Ontario is forecast to pay $16.2 billion in interest costs in 2025–26, consistent with the 2025 Budget forecast. The net interest-to-operating revenue is forecast to be 6.4 per cent in 2025–26, a decrease of 0.1 percentage point from the 2025 Budget. Even with the forecasted increases to interest costs, this ratio remains close to the lowest levels it has been at since the 1980s.

Borrowing Program

Ontario’s borrowing program is primarily used to fund deficits, refinance maturing debt, and make investments in capital assets. Ontario will continue to finance most of its borrowing program in the long-term public markets in Canada and internationally.

As of October 30, 2025, Ontario has completed $32.4 billion in long-term borrowing for 2025–26 of $42.5 billion. This is $0.3 billion lower than forecasted in the 2025–26 First Quarter Finances. The 2026–27 and 2027–28 long-term public borrowing forecasts are $40.7 billion and $34.5 billion.

Year-end cash and cash equivalents are forecast to decrease by $12.0 billion in 2025–26 and $2.0 billion in 2026–27.

Ontario plans to increase short-term borrowing by $5.5 billion in 2025–26 and by a further $5.5 billion in 2026–27. The combined increase in short-term borrowing over this fiscal year and next fiscal year is $3.5 billion higher than forecasted in the 2025 Budget. This allows Ontario to take advantage of the steady decline in short-term interest rates relative to long-term rates. Increasing short-term borrowing has also allowed Ontario to diversify its short-term investor base by re‑establishing the U.S. Commercial Paper program and will maintain the proportion of short-term debt as a percentage of total debt outstanding within the target range of 5 to 7 per cent, as it has been over the past 10 years.

In the event that alternative economic scenarios materialize, Ontario’s borrowing requirements in the next three years would also change (see Chapter 3: Ontario’s Fiscal Plan and Outlook for more details, and a description of the resulting alternative medium-term outlook scenarios). Under the Faster Growth scenario, long-term borrowing would decrease by a total of $19.6 billion over the three-year outlook period, while under the Slower Growth scenario, long‑term borrowing would increase by $18.2 billion over the same period.

To date, approximately 66 per cent of 2025–26 long-term borrowing was completed in Canadian dollars, through 25 syndicated issues and one Green Bond. This percentage is within Ontario’s new guidance for domestic borrowing of 65 to 80 per cent for the 2025–26 fiscal year, which was adjusted from the 70 to 85 per cent target range in the 2025 Budget. This range will continue to be adjusted, if necessary, in response to evolving investor demand in the Canadian dollar and foreign currency debt markets.

Foreign currency borrowing helps reduce Ontario’s overall borrowing costs by continuing to diversify Ontario’s investor base. This diversification ensures Ontario will continue to have access to capital, even if domestic market conditions become challenging. Approximately $11.0 billion, or 34 per cent of this year’s long-term borrowing, was completed in U.S. dollars, euros, and Swiss francs.

Sustainable Bond Framework

The Green Bond Program, as part of the Sustainable Bond Framework, has been a core component of Ontario’s borrowing program since 2014. It is an important tool to help finance public transit initiatives, extreme weather-resistant infrastructure, as well as energy efficiency and conservation projects. Ontario remains the largest and most frequent issuer of Canadian dollar Green Bonds, with 19 issues totalling $22.5 billion since 2014–15 and $17.75 billion outstanding.

On August 28, 2025, Ontario issued a $1.0 billion Green Bond. This was the first Green Bond issued in 2025–26, the nineteenth Green Bond overall, and Ontario’s fifth Green Bond issued under the Ontario Sustainable Bond Framework. Four projects were selected to receive funding from the most recent Green Bond:

• GO Transit Expansion;
• Hazel McCallion Line;
• Ontario Line Subway; and
• Scarborough Subway Extension.

Ontario plans to continue its leadership in the Canadian dollar Green Bond market and, subject to market conditions, will issue multiple Green Bonds each fiscal year.

Cost of Debt

Globally, central banks including the Bank of Canada and the U.S. Federal Reserve have lowered overnight interest rates. However, longer-term interest rates, which affect the majority of Ontario’s borrowing, have remained relatively stable over the past three years. Ontario actively manages financial market risks and adapts interest rate risk management strategies to minimize the impact of changing market conditions on Ontario’s IOD costs. Adaptive interest rate risk management will be especially important in 2025–26, given the potential policy response by central banks and the global economic uncertainty surrounding tariffs. Chart 4.6 shows Ontario’s decision to lock in long‑term rates and extend the term of its debt, since the Global Financial Crisis in 2007–08 has left the interest rate on the total debt portfolio lower in historical terms, in spite of rising broader market interest rates.

Ontario’s borrowing costs for 2025–26 are estimated to be 4.0 per cent, unchanged from the 2025 Budget forecast. A one percentage point change in interest rates, either up or down from the current interest rate forecast, is estimated to have a corresponding change in Ontario’s borrowing costs of approximately $0.8 billion in the first full year. IOD remains Ontario’s fourth largest expense after health care, education, and social services.

Term of Debt

Ontario has continued to extend the term of its debt when investor demand allowed, to reduce future refinancing risk. This also protects the IOD forecast in the long term against future interest rate increases. Ontario has issued $158.3 billion of bonds, or almost one‑third of total debt outstanding, with maturities of 30 years or longer since 2010–11. This includes $8.7 billion in 2025–26.

The success Ontario has had in extending the term of its debt from the time of the Global Financial Crisis has created flexibility for managing its large borrowing program and debt portfolio. Due to the extension of the term of debt, the impact on IOD in the short term and medium term has been lessened. Ontario will continue to monitor the market and adjust the debt term strategy in response to further changes to interest rates and the yield curve.

Ensuring Adequate Liquidity Levels

Ontario aims to maintain an optimal level of cash reserves that balances potential holding costs with the need to have adequate funds to meet its financial obligations in a timely manner, as well as to be able to respond promptly during economic downturns or financial challenges. Prior to 2025–26, short-term interest rates were higher than long-term rates, which meant that holding liquid reserves reduced IOD as short-term investments earned more income than Ontario’s cost of borrowing long-term debt. Although short-term and long-term rates have normalized, Ontario intends to maintain recent liquid reserve levels due to the ongoing market and economic volatility.

As shown in Chart 4.9, Ontario’s cash reserves in 2025–26 are projected to be $44.5 billion.

Debt Burden Reduction Strategy

The government remains committed to reducing the debt burden and putting Ontario’s finances on a sustainable path. As a result, Ontario has maintained its targets and continues to make progress towards achieving them over the medium-term outlook. In addition, Ontario’s path to balance by 2027–28 will further support progress towards its Debt Burden Reduction Strategy.

As outlined in the 2025 Budget, Ontario made changes to its presentation of interest costs and interest revenue, which resulted in an impact on the terminology in the Debt Burden Reduction Strategy and its corresponding ratios.

This change resulted in the renaming of two debt sustainability measures. “Interest on Debt-to-Revenue” is now “Net Interest-to-Operating Revenue,” and “Net Debt-to-Revenue” is now “Net Debt-to-Operating Revenue.” To enable meaningful comparisons with prior fiscal years, the calculation remains unchanged, which ensures comparators remain the same. The updated terminology better explains the calculation of the ratio.

Ontario’s 2025–26 net debt‐to‐GDP ratio is now forecast to be 37.7 per cent, a decrease of 0.2 percentage points from the forecasted 37.9 per cent in the 2025 Budget, which is primarily due to a lower than projected deficit. This ratio measures the relationship between the government’s obligations and its ability to meet them, indicating the burden of government debt as a share of the economy. The ratio is projected to be 38.7 per cent in 2026–27 and 38.4 per cent in 2027–28, which are both lower when compared to the 2025 Budget forecast.

Over the medium-term outlook, the net debt‑to‑GDP ratio is forecast to stay below the target of 40.0 per cent, demonstrating that Ontario continues to make positive progress towards reducing the debt burden.

The net debt-to-operating revenue ratio is projected to be 208 per cent in 2025–26, 3 percentage points below the 211 per cent forecast in the 2025 Budget. This ratio is an indicator of how many years it would take to eliminate the debt if the Ontario government were to spend all its annual revenue on debt repayment. Over the medium-term outlook, this ratio is forecast to be 213 per cent in 2026–27 and 210 per cent in 2027–28, which are both lower when compared to the 2025 Budget forecast. While the current economic environment will temporarily raise the level of this ratio, the government remains committed to, and has proven it has the capability to, re-attain this target.

Ontario’s net interest-to-operating revenue ratio is projected to be 6.4 per cent in 2025–26, 0.1 percentage point lower than the forecast in the 2025 Budget.This ratio represents how much Ontario needs to spend on interest for every revenue dollar received. Over the medium-term outlook, this ratio is forecast to be 6.6 per cent in 2026–27 and 6.7 per cent in 2027–28, which are both lower when compared to the 2025 Budget forecast.

Ontario continues to show positive progress on the net interest-to-operating revenue ratio and is forecasting to meet the target and stay below 7.5 per cent over the medium-term outlook. This ratio remains close to the lowest levels it has been at since the 1980s.

Chart Descriptions

Chart 4.1: Borrowing Outlook Scenarios for Long-Term Borrowing

($ Billions)

Year	2024–25	2025–26	2026–27	2027–28
Planning Projection	49.5	42.5	40.7	34.5
Slower Growth Scenario	49.5	44.8	47.5	43.6
Faster Growth Scenario	49.5	40.0	33.6	24.5

Sources: Ontario Financing Authority and Ontario Ministry of Finance.

Return to Chart 4.1

Chart 4.2: 2025–26 Borrowing

Long-term public borrowing of $32.4 billion has been completed so far for fiscal year 2025–26. This consisted of $20.5 billion (63 per cent) of Canadian dollar syndicated bonds, $1.0 billion (3 per cent) Canadian dollar Green Bonds, $3.4 billion (11 per cent) of Euro bonds, $0.7 of a billion (2 per cent) of Swiss franc bond and $6.9 billion (21 per cent) of U.S. dollar bonds.

Note: Numbers may not add due to rounding.

Source: Ontario Financing Authority.

Return to Chart 4.2

Chart 4.3: Domestic and International Borrowing

Ontario’s total long-term borrowing completed in 2025–26 is forecast to be $42.5 billion — $21.5 billion was borrowed in the Canadian dollar market and $11.0 billion was borrowed in foreign currencies, with $10.1 billion of borrowing remaining for 2025–26.

Year	Canadian Dollar ($ Billions)	Foreign Currencies ($ Billions)	Total ($ Billions)
2007–08	15.4	2.6	18.0
2008–09	19.0	9.7	28.7
2009–10	21.4	22.4	43.8
2010–11	23.5	16.4	39.9
2011–12	28.4	6.5	34.9
2012–13	26.4	10.2	36.6
2013–14	29.4	6.6	36.0
2014–15	31.4	8.4	39.9
2015–16	25.8	6.3	32.1
2016–17	19.9	7.1	27.0
2017–18	21.1	12.8	33.9
2018–19	30.6	9.0	39.6
2019–20	28.9	10.6	39.5
2020–21	39.1	20.7	59.8
2021–22	32.0	9.2	41.1
2022–23	28.5	3.7	32.2
2023–24	36.7	5.9	42.6
2024–25	39.1	10.5	49.5
2025–26	21.5	11.0	42.5

Note: Numbers may not add due to rounding.

Source: Ontario Financing Authority.

Return to Chart 4.3

Chart 4.4: Green Bond Allocation by Framework Category

A total of $22.5 billion in Green Bond funding has or will provide funding for 29 projects. Nine of those projects are under the Clean Transportation framework category and have received 86 per cent of the funding. Nineteen projects are under the Energy Efficiency category and have received 12 per cent of the funding. One project is under the Climate Change Adaptation category and has received 2 per cent of the funding.

Note: Numbers may not add due to rounding.

Source: Ontario Financing Authority.

Return to Chart 4.4

Chart 4.5: Ontario’s Green Bond Issues

Since 2014, Ontario has issued Green Bonds totalling $22.5 billion.

Year	2014–15	2015–16	2016–17	2017–18	2018–19	2019–20	2020–21	2021–22	2022–23	2023–24	2024–25	2025–26
Green Bond Issues ($)	$0.5 billion	$0.75 billion	$0.8 billion	$1.0 billion	$0.95 billion	$1.25 billion	$2.75 billion	$4.5 billion	$2.5 billion	$3.0 billion	$3.5 billion	$1.0 billion

Source: Ontario Financing Authority.

Return to Chart 4.5

Chart 4.6: Effective Interest Rate (Weighted Average) on Total Debt

As of August 31, 2025, the effective interest rate (calculated as a weighted average) for fiscal year-end is forecast to be 3.4 per cent on Ontario’s total debt.

Year	Effective Interest Rate (%)
1990–91	10.9
1991–92	10.7
1992–93	10.1
1993–94	9.5
1994–95	9.8
1995–96	9.4
1996–97	9.0
1997–98	9.0
1998–99	8.6
1999–00	8.4
2000–01	8.2
2001–02	7.6
2002–03	7.2
2003–04	6.7
2004–05	6.4
2005–06	6.1
2006–07	6.0
2007–08	5.8
2008–09	5.2
2009–10	4.6
2010–11	4.5
2011–12	4.4
2012–13	4.1
2013–14	3.9
2014–15	3.7
2015–16	3.6
2016–17	3.5
2017–18	3.6
2018–19	3.6
2019–20	3.5
2020–21	3.0
2021–22	3.0
2022–23	3.2
2023–24	3.4
2024–25	3.4
2025–26	3.4* (As of August 31, 2025.)

Sources: Public Accounts of Ontario (1990–1991 to 2024–2025) and Ontario Financing Authority.

Return to Chart 4.6

Chart 4.7: Average Annual Ontario Borrowing Rate Forecast

Year	(%)
2024–25	4.2
2025–26	4.0
2026–27	4.1
2027–28	4.1

Source: Ontario Financing Authority.

Return to Chart 4.7

Chart 4.8: Weighted-Average Term of Borrowings

The average term of Ontario’s debt portfolio has been extended from 9.7 years in 2009–10 to 11.5 years in 2025–26. The weighted-average borrowing term for 2025–26 was 14.7 years as of October 30, 2025.

Year	Weighted-Average Borrowing Term (Years)	Debt Portfolio Average Term (Years)
2009–10	8.1	9.7
2010–11	12.8	10
2011–12	13	10.1
2012–13	12.4	10.1
2013–14	13.6	10.4
2014–15	14.1	10.7
2015–16	14.2	10.9
2016–17	13.9	10.9
2017–18	12.1	10.7
2018–19	12.9	10.7
2019–20	14.5	10.9
2020–21	12	10.8
2021–22	14.5	10.9
2022–23	15	11.1
2023–24	15.2	11.4
2024–25	14.1	11.2
2025–26	14.7	11.5* (As of August 31, 2025.)

Source: Ontario Financing Authority.

Return to Chart 4.8

Chart 4.9: Average Unrestricted Liquid Reserve Levels

Average unrestricted liquid reserve levels are forecast to be $44.5 billion as of September 29, 2025.

Year	Average Unrestricted Liquid Reserve Levels ($ billions)
2009–10	14.4
2010–11	19.4
2011–12	20.2
2012–13	23.3
2013–14	24.9
2014–15	23.6
2015–16	21.7
2016–17	21.1
2017–18	30.1
2018–19	32.7
2019–20	32.3
2020–21	46.2
2021–22	47.2
2022–23	36.2
2023–24	46.8
2024–25	41.9
2025–26	44.5* (As of September 29, 2025.)

Source: Ontario Financing Authority.

Return to Chart 4.9

Chart 4.10: Net Debt-to-GDP

Ontario’s net debt-to-GDP ratio is forecast at 37.7 per cent in 2025–26.

Year	Planning Projection (%)	Faster Growth Scenario (%)	Slower Growth Scenario (%)
1990–91	13.4	–	–
1991–92	17.1	–	–
1992–93	21.1	–	–
1993–94	26.6	–	–
1994–95	28.3	–	–
1995–96	30.1	–	–
1996–97	31.2	–	–
1997–98	30.5	–	–
1998–99	29.4	–	–
1999–00	32.1	–	–
2000–01	29.3	–	–
2001–02	28.2	–	–
2002–03	26.8	–	–
2003–04	27.5	–	–
2004–05	26.8	–	–
2005–06	27.8	–	–
2006–07	27.1	–	–
2007–08	26.6	–	–
2008–09	27.8	–	–
2009–10	32.3	–	–
2010–11	34.5	–	–
2011–12	36.6	–	–
2012–13	38.2	–	–
2013–14	39.7	–	–
2014–15	40.5	–	–
2015–16	40.3	–	–
2016–17	39.7	–	–
2017–18	39.2	–	–
2018–19	39.3	–	–
2019–20	39.5	–	–
2020–21	42.6	–	–
2021–22	39.5	–	–
2022–23	37.7	–	–
2023–24	36.6	–	–
2024–25	36.2	–	–
2025–26	37.7	37.2	38.1
2026–27	38.7	37.0	40.5
2027–28	38.4	35.7	40.9

Note: See Chapter 3: Ontario’s Fiscal Plan and Outlook for details on the Faster Growth and Slower Growth scenarios.

Sources: Statistics Canada and Ontario Ministry of Finance.

Return to Chart 4.10

Chart 4.11: Net Debt-to-Operating Revenue (formerly Net Debt-to-Revenue)

Ontario’s net debt-to-operating revenue ratio is forecast to be 208 per cent in 2025–26.

Year	Planning Projection (%)	Faster Growth Scenario (%)	Slower Growth Scenario (%)
1990–91	78	–	–
1991–92	104	–	–
1992–93	126	–	–
1993–94	157	–	–
1994–95	168	–	–
1995–96	176	–	–
1996–97	187	–	–
1997–98	184	–	–
1998–99	182	–	–
1999–00	189	–	–
2000–01	183	–	–
2001–02	183	–	–
2002–03	177	–	–
2003–04	188	–	–
2004–05	170	–	–
2005–06	162	–	–
2006–07	153	–	–
2007–08	146	–	–
2008–09	164	–	–
2009–10	189	–	–
2010–11	192	–	–
2011–12	208	–	–
2012–13	216	–	–
2013–14	225	–	–
2014–15	234	–	–
2015–16	225	–	–
2016–17	223	–	–
2017–18	214	–	–
2018–19	220	–	–
2019–20	226	–	–
2020–21	226	–	–
2021–22	207	–	–
2022–23	207	–	–
2023–24	199	–	–
2024–25	191	–	–
2025–26	208	204	211
2026–27	213	203	223
2027–28	210	194	225

Note: See Chapter 3: Ontario’s Fiscal Plan and Outlook for details on the Faster Growth and Slower Growth scenarios.

Sources: Public Accounts of Ontario (1990–1991 to 2024–2025) and Ontario Financing Authority.

Return to Chart 4.11

Chart 4.12: Net Interest-to-Operating Revenue (formerly Interest on Debt-to-Revenue)

Ontario’s net interest-to-operating revenue ratio is forecast to be 6.4 per cent in 2025–26.

Year	Planning Projection (%)	Faster Growth Scenario (%)	Slower Growth Scenario (%)
1990–91	7.7	–	–
1991–92	8.8	–	–
1992–93	10.8	–	–
1993–94	13.9	–	–
1994–95	14.5	–	–
1995–96	14.6	–	–
1996–97	14.8	–	–
1997–98	14.2	–	–
1998–99	14.3	–	–
1999–00	15.5	–	–
2000–01	15.0	–	–
2001–02	14.2	–	–
2002–03	12.9	–	–
2003–04	12.9	–	–
2004–05	11.1	–	–
2005–06	9.7	–	–
2006–07	8.9	–	–
2007–08	8.4	–	–
2008–09	8.7	–	–
2009–10	8.9	–	–
2010–11	8.8	–	–
2011–12	9.1	–	–
2012–13	9.0	–	–
2013–14	9.1	–	–
2014–15	8.9	–	–
2015–16	8.5	–	–
2016–17	8.3	–	–
2017–18	7.9	–	–
2018–19	8.1	–	–
2019–20	8.0	–	–
2020–21	7.5	–	–
2021–22	6.8	–	–
2022–23	6.4	–	–
2023–24	5.5	–	–
2024–25	5.5	–	–
2025–26	6.4	6.3	6.5
2026–27	6.6	6.3	6.9
2027–28	6.7	6.2	7.2

Note: See Chapter 3: Ontario’s Fiscal Plan and Outlook for details on the Faster Growth and Slower Growth scenarios.

Sources: Public Accounts of Ontario (1990–1991 to 2024–2025) and Ontario Financing Authority.

Return to Chart 4.12