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OTTAWA – Now that the federal Liberals have shied away from their vow to keep annual deficits under $10 billion, they’ve latched on to another fiscal target – and this one will be much easier to meet.

The new government is suddenly talking about the debt-to-GDP ratio, promising repeatedly to keep it on a downward track every year until the next election.

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The government calculates its debt-to-GDP ratio by dividing total federal debt by the overall size of the economy, as measured by nominal GDP.

It represents a government’s capacity to pay back debt – and focusing on it gives politicians more spending flexibility.

By targeting debt-to-GDP, the Liberals could instead be prepared to run annual deficits of up to $25 billion in the coming years and still lower the ratio – as long as the economy grows at a decent pace, economists say.