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Canada Pledges ‘Prudent’ Fiscal Policy in Covid-19 Recovery Push

Kait Bolongaro

(Bloomberg) -- Finance Minister Chrystia Freeland vowed to preserve Canada’s reputation for sound fiscal management as her government considers the next steps to drive the recovery.

In her most extensive comments on policy since she became finance minister last month, Freeland said Canada has a “hard-won and well deserved reputation” for fiscal prudence, including the lowest-debt-to-output ratio in the Group of Seven, which provided the country with the fire power to combat the current crisis.

“Let me just assure Canadians we understand the value of wise and prudent fiscal management and that is a policy our government will continue,” Freeland, who is also deputy prime minister, told reporters in Ottawa.

The pledge to remain careful comes as Prime Minister Justin Trudeau signals he plans to keep deficits historically elevated for years, promising ambitious new spending to drive the recovery and fill in gaps in social safety nets exposed by the virus. The prime minister is expected to unveil elements of the plan in a Sept. 23 parliamentary address.

Freeland has been consulting widely with business, provincial leaders and lawmakers in her government on the next steps, and is “well aware of the many questions and concerns” about the nation’s economic course, she said.

Canada’s largest banks warned Freeland in a call last week the government will need to commit to new debt targets to reinforce confidence in the budgeting process.

At the press conference, Freeland laid out her two key economic priorities: fighting Covid-19 and spurring economic growth and job creation, citing the 1.8 million Canadian workers who have lost jobs or are working less since the pandemic struck in March.

“The single most important economic policy of our government and best thing we can do for our economy is to keep the coronavirus under control,” she said.

She also reaffirmed the government’s commitment to pursuing its environmental agenda, saying green jobs were a critical objective.

Freeland replaced Bill Morneau as finance minister in August after Morneau resigned over a growing rift with Trudeau over how to manage the nation’s coffers.

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