NEW YORK (Reuters) - Ontario must live with the “new normal” of slower economic growth, while at the same time work to reduce its debt burden, the finance minister of Canada’s most populous province said on Wednesday.
Ontario Finance Minister Dwight Duncan said Ontario remains on track to meet its fiscal targets and eliminate its C$16 billion ($15.8 billion) deficit by 2017-2018, though he acknowledged the challenge posed by weaker-than-anticipated growth.
“Global economic uncertainty only adds to our ongoing efforts to reduce Ontario’s deficit and a growing debt burden - both of which are a result of necessary government stimulus spending to help families and businesses get through the global recession of 2008 to 2009,” Duncan said in prepared remarks for a speech in New York.
Rating agency Moody’s recently threatened to downgrade the province’s debt rating, putting additional pressure on Ontario’s minority Liberal government to reduce the deficit.
Ontario’s economy was hurt last year by the supply chain disruption caused by Japan’s massive earthquake, but the economy was able to rebound modestly in the third quarter of 2011.
“From the tragedy of the tsunami in Japan that disrupted supply chains in our manufacturing sector, to the sovereign debt crisis in Europe, we must live with a new normal - that is slower economic growth, which is often the result of global issues beyond our control,” said Duncan.
The province is Canada’s manufacturing heartland and relies heavily on the shipment of autos and parts to the United States.
In order to identify ways to deal with the deficit, the government set up a commission led by former TD Bank chief economist Don Drummond, which is expected to release its policy recommendations ahead of the spring budget.
Duncan said the report “will provide recommendations for long-term, fundamental changes to the way government works and how to best deliver public services to taxpayers.”
Reporting By Leah Schnurr; Editing by Padraic Cassidy