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Finance Minister Bill Morneau appears at a Commons committee for pre-budget consultations, Feb. 23, 2016.

Sean Kilpatrick/The Canadian Press

Ottawa is on pace to add $150-billion to the national debt over the next five years, according to a new analysis that cautions the federal Liberals to keep debt loads manageable amid the push to stimulate the Canadian economy.

The estimate came on the same day that Statistics Canada reported real gross domestic product growth of 0.8 per cent in the fourth quarter, a figure that beat expectations but still meant that the economy grew by just 1.2 per cent for the 2015 calendar year.

Finance Minister Bill Morneau has promised to boost economic growth while also lowering the federal debt-to-GDP ratio over the course of the Liberals' first mandate, but a new report by TD Economics questions that claim.

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By extrapolating the latest federal forecast and combining it with Liberal campaign promises, TD projects deficits of about $30-billion a year for five years, which would add $150-billion to the national debt.

That amount would nearly match the $154-billion in new debt approved over six years under the Conservatives as part of the response to the 2008-09 financial crisis.

The estimate adds to the ongoing debate over how Mr. Morneau's March 22 budget should address an economy that, while not in recession, is struggling with low growth primarily caused by the sharp downturn in the price of oil and other commodities.

The TD figures include the government's $6-billion a year in contingencies. If that amount is not needed, the projected shortfall over five years would be $120-billion rather than $150-billion. However, the report notes the deficits could be even larger if Ottawa increases planned spending or if the economy grows at a slower rate than expected.

According to TD, the federal debt-to-GDP ratio, including the contingency figures, will climb from 31 per cent this year to 36.1 per cent in the 2020-21 fiscal year unless the government moves to cut spending or raise taxes.

TD's deputy chief economist Derek Burleton said deficit spending along these lines is justified in the current environment but that Ottawa must be careful to have a clear plan to keep the debt-to-GDP ratio near its current relatively low levels.

"They need to balance some of the longer-term risks of running deficits and a rising debt burden," he said.

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Mr. Burleton said shrinking the deficit over time will be challenging for Ottawa because of expected low growth rates and the likelihood that the price of oil will not rebound any time soon. However, he noted the current situation is not comparable to the financial crisis that hit in 2008 and the plan being proposed now is less focused on short-term stimulus measures than the deficit plan launched by the Conservatives in the 2009 budget.

"The amount of stimulus should be directly proportional with the severity of the crisis and the economy is not in crisis at the moment. It is experiencing significant growth headwinds," he said. "I think restraining [spending] at this point would be counter-productive, so running moderate deficits as it plans to do I think is reasonable."

The size of the federal debt grew from $457.6-billion in 2007-08 to $611.9-billion in 2013-14 because of six years of deficits created by the impact of the global financial crisis and deficit spending to stimulate growth. The federal debt as a percentage of GDP was once as high as 67.1 per cent in 1995-96. The ratio has declined for the past three consecutive years, from 33.3 per cent in 2012-13 to 31 per cent in 2014-15.

Dan Lauzon, a spokesperson for Mr. Morneau, said the government has "a fundamentally new approach" to managing the economy.

"Thanks in large part to the leadership of previous Liberal governments in the 1990s, Canada has the lowest debt-to-GDP ratio in the G7, and there has never been a better time to invest," he said. "We will maintain this ratio on a downward track throughout our mandate, and make necessary investments that will lead to long-term economic growth and a stronger middle class."

Conservative finance critic Lisa Raitt said any positive impact of new federal measures could end up being offset by new provincial carbon taxes as part of the federal government's push for a national climate-change plan. Ms. Raitt said the current landscape should force the Liberals to rethink some of their promises.

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"They should definitely be doing a triage of what they have promised and what is affordable for Canadians," she said.

Bay Street economists have argued in recent months that federal deficit spending is justified, but there is disagreement over whether the Liberals should provide further stimulus in addition to what was promised during the election campaign.

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