Trudeau Finance Chief to Boost Budget Risk Cushion on Virus
Trudeau Finance Chief to Boost Budget Risk Cushion on Virus
(Bloomberg) -- Finance Minister Bill Morneau sought to reassure Canadians the government has the tools to shield the economy from the global coronavirus crisis.
In a speech two days after the central bank slashed interest rates by half a percentage point, Morneau said the government plans to increase the amount it sets aside for emergencies in its next budget, due in coming weeks.
“We will maintain our fiscal firepower to deal with potential challenges down the road while ensuring that we are also dealing with issues immediately,” Morneau told reporters Friday after his breakfast remarks in Toronto. In its budget last year, the government built in a C$3 billion ($2.2 billion) cushion.
Justin Trudeau’s finance chief said he has been in regular contact with the CEOs of major banks and telecommunications companies to discuss the impact of the virus. The government may have to provide support to people who cannot work because they have been quarantined, Morneau said, without providing specifics.
Canada is confronting the coronavirus crisis from a strong fiscal and economic position, Morneau said. He stressed that the government would abide by its commitment to keep reducing the size of its debt as a portion of gross domestic product.
Asked about co-ordination between Group of Seven central banks and government, Morneau said that while each nation is different moves made in concert have can have “more impact” during global crises.
Interest-rate cuts this week by the U.S. Federal Reserve and Bank of Canada are meant to address “the challenge around market sentiment and individual confidence,” Morneau said. “We will be looking at fiscal measures that are always going to be complimentary to that sort of approach.”
While the coronavirus has dominated the agenda this week, Canada is also facing a political crisis around natural resources and transportation infrastructure. The finance minister said Trudeau’s approach to recent disruptions to rail traffic by First Nations and environmental groups has been effective.
“From the very beginning, we knew that we could not cut corners and that dialogue, no matter how difficult, was the path we had to follow,” Morneau said. “Rail traffic is resuming. People who were laid off are being re-hired. All of the blockades have been lifted.”
The prime minister maintains that strong action on climate change and indigenous rights will win support for major energy projects. His government last week struck a tentative deal with some hereditary chiefs in British Columbia opposed to TC Energy Corp.’s Coastal GasLink natural gas pipeline.
--With assistance from Jacqueline Thorpe.
To contact the reporter on this story: Kait Bolongaro in Ottawa at kbolongaro@bloomberg.net
To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary, Chris Fournier
©2020 Bloomberg L.P.