OTTAWA – Canada’s new minority Liberal government, which looks set to rely on a left-leaning party to stay in power, will reassure markets it remains committed to fiscal responsibility, Finance Minister Bill Morneau said on Thursday.
Prime Minister Justin Trudeau lost his majority in an election last month and his most likely partner is the New Democratic Party, which wants action on multi-billion-dollar programs such as universal coverage for prescription drugs.
Morneau also said it was too early to discuss whether the government might deliver a fiscal update later this year. Trudeau is due to unveil a new cabinet on Nov. 20.
“We’ll want to make sure we are out talking to Canadians from all different walks of life, including people who are market participants, to assure them that our government remains committed to fiscal responsibility,” Morneau told reporters.
“At the same time, we need to deal with the things Canadians asked us to deal with, making sure people have opportunities and making sure we deal with climate change,” he said.
Trudeau came to power in 2015 promising to run limited budget deficits for three years to help stimulate the economy. The shortfalls, though, were much larger than planned, and he will not say when the budget might be balanced again.
During the campaign Trudeau promised billions of dollars in new spending initiatives if re-elected, saying the federal deficit would be C$27.4 billion ($20.8 billion) in the first year of a second term, before declining to C$21 billion in 2023-24.
The Liberals said the ratio of debt-to-gross domestic product would remain around the 30% mark. Because of economic growth, the deficit could climb to about C$30 billion over the next election cycle without increasing debt as a share of gross domestic product, according to Reuters calculations.
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