Canada plans to increase federal bond issuance by almost 20 per cent next fiscal year to finance a growing budget deficit and a jump in debt maturities.

The federal government plans to sell $119 billion of bonds in fiscal 2019-2020, up from $100 billion issued during the year ending March 31, according to budget documents released Tuesday in Ottawa. The debt sales for the current period were reduced by about $15 billion compared with estimates included in the previous budget.

The budget projects a 2019-20 budget deficit of $19.8 billion, up from $14.9 billion in the current fiscal year. Budgetary revenue is forecast to jump almost 2 per cent next year, compared with a 1.8 per cent increase in program expenses.

Next year’s total refinancing needs, which include bonds, Treasury bills and debt in foreign currencies, will rise to $250 billion from $227 billion forecast in last year’s budget. The stock of total federal market debt is expected to rise to $754 billion from $723 billion.

The treasury plans to increase its reliance on short term debt, a measure that could help to keep borrowing costs in check. Outstanding Treasury bills are expected to rise to $151 billion at the end of the coming fiscal year, compared with $131 billion this year and $111 billion at the end of March 2018. The 36 per cent increase in T-bills over the two-year period compares with an increase of 1.2 per cent to $583 billion of outstanding domestic bonds.

The cost of servicing the debt is expected to rise to $26.2 billion up from $23.6 billion for the 2018-2019 period and $21.9 billion in the previous year. Debt charges are expected to rise even as bond investors aren’t expecting the Bank of Canada to raise its benchmark rate above 1.75 per cent any time soon.

Canadian assets have jumped so far this year even amid signs the economy is slowing. An index of Canadian bonds has returned 3.2 per cent already this year, almost double the return of a comparable U.S. bond gauge, according to the Bloomberg Barclays index.

Canada’s two-year government bonds traded Monday at a yield of about 1.63 per cent, or 82 basis points less than comparable U.S. Treasury notes. That in turn is about 2 basis points from the widest gap between the two curves since 2007, reached earlier this month.

The Canadian dollar, which has beaten all international reserve currencies but the British pound this year as oil prices recover, has received bearish calls from analysts at Toronto-Dominion Bank, which downgraded its forecast on Friday, seeing the loonie within a range of $1.35 to $1.40 per U.S. dollar for much of this year. Citigroup’s technical strategists are targeting $1.36 to $1.37. That compares with $1.336 as of Monday afternoon.