Canadian finance chief Jim Flaherty boasts of Canada’s economic strength

Canadian finance chief Jim Flaherty boasts of Canada’s economic strength

Canada's Finance Minister Jim Flaherty answers questions during a news conference in London March 16, 2010.

Canada’s Finance Minister Jim Flaherty answers questions during a news conference in London March 16, 2010.

Photograph by: Suzanne Plunkett/Reuters, Suzanne Plunkett/Reuters

LONDON — Finance Minister Jim Flaherty boasted about Canada’s relative fiscal strength Tuesday as Britain and other members of the European Union face intense political divisions and social unrest over massive debt problems.

Flaherty, on the second leg of a two-day trip that began in New York, said Canada is on track to balance its budget, while also enjoying renewed business confidence and consumer demand and has the world’s strongest and best-regulated banking system.

“Our nation fully intends to build on that crisis-tested advantage,” he told the Canada-United Kingdom Chamber of Commerce.

He acknowledged there has been “upward pressure” on the Canadian dollar, which closed near parity Tuesday at 98.62 U.S. cents, its highest finish since July 25, 2008.

But Flaherty, who along with Bank of Canada governor Mark Carney warned only months ago of the dangers of a high-flying currency, seemed more sanguine about it on Tuesday.

“Canada’s relatively strong fiscal position is assisting the rise of the dollar,” he said.

The Canadian government, he said, is “not worried, but watchful,” with regard to real estate prices, Flaherty told a business audience, noting his recent decision to toughen requirements for government-insured mortgages.

“One has to watch this to make sure that one does not have borrowers who cannot afford higher interest rates, because as we all know interest rates are historically low and they have nowhere to go but up.”

Nevertheless Flaherty, who acknowledged less flattering statistics such as an 8.2 per cent unemployment rate, said the Canadian and global economies remain vulnerable due to the huge indebtedness of many countries, particularly the U.S. economy.

“I think we’re all concerned about . . . the size of the U.S. deficit,” he said, citing the economy’s dependence on Canada-U.S. Trade.

He also noted concern about massive debt problems in a number of European countries, including Greece.

“We look forward to other developed nations of the world showing their plans to move out of deficit, towards balanced budgets over time,” he said.

“That is necessary for the firm restoration of confidence in developed countries, that we all have a plan to exit from the stimulus” spending programs launched after the global crisis broke out in the autumn of 2008.

While Canada’s $53.8-billion federal deficit sounds hefty, it represents 3.5 per cent of the country’s gross domestic product —_less than a third of the current U.S. and British deficit-to-GDP ratios.

Flaherty’s budget, released March 4, announced reductions in planned spending that the finance minister said would bring the deficit down to $1.8 billion by 2014-15.

Kevin Page, Canada’s independent parliamentary budget officer, has labelled Flaherty’s projections too optimistic, and has projected the deficit will be down to just $12.3 billion by 2014-15.

But that higher figure would still represent just 0.6 per cent of Canada’s projected GDP.

Posted via web from Toronto Real Estate News | Blog


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Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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