Trudeau’s Finance Chief Says Spending Won’t Dent Canada’s Brand
Finance Minister Chrystia Freeland said her debut budget lays out a “reasonable and sustainable” debt track that maintains Canada’s reputation as a fiscal stalwart.
The fiscal plan forecasts a declining debt ratio in coming years once Covid-related spending is no longer needed, Prime Minister Justin Trudeau’s finance chief said Wednesday. The nation’s deficit, meanwhile, will also drop to pre-pandemic levels.
“Canada being Canada, we are proud of our reputation for fiscal prudence and that’s something I would say is built into Canada’s institutional DNA,” Freeland said in an interview for Bloomberg Markets magazine, part of which will air on the Stephanomics podcast next month. “So we are confident the fiscal track we have put forward is reasonable and sustainable.”
Freeland, who was appointed finance minister in August, released her first full fiscal plan on April 19, adding more than C$100 billion ($82 billion) in new outlays to already record deficits. Still, most of the new spending will be temporary or one-off measures that will allow for a return to small deficits in coming years.
The budget sees debt as a share of gross domestic product peaking this year, before gradually falling below 50% by 2025. It was slightly above 30% pre-pandemic. The deficit will decline to just over 1% of GDP over that time, from 16% currently.
Trudeau’s government will have run deficits of more than C$500 billion over a two-year span. Freeland defended the spending, saying it was important to help support Canadians through the the crisis, avoid scarring while laying groundwork for future growth.
“What we said in the budget was that now is the time that we need to finish the fight against Covid and that does cost money,” said Freeland, who is also deputy prime minister. “We really believe it’s important to invest now in a swift and robust recovery from the Covid recession and to invest in long term growth and that’s what this budget does.”
Freeland cited the nation’s strong rebound in the fourth quarter as evidence those efforts to prevent scarring have been working.
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