UPDATE 2-Canada's new government pledges fiscal plan suited to tough times

Fri Dec 4, 2015 5:11pm EST
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(Adds opposition reaction)

By Randall Palmer and David Ljunggren

OTTAWA Dec 4 (Reuters) - Canada's Liberal government, unveiling its plans at the start of the new Parliament, promised on Friday to pursue a fiscal plan "that is responsible, transparent and suited to challenging economic times."

The formal announcement, delivered just hours after fresh data showed the economy was struggling, made no mention of whether the Liberals would stick to their campaign pledge to limit budget deficits to C$10 billion ($7.5 billion) a year.

Liberal leader Justin Trudeau won a parliamentary majority in the Oct. 19 election promising to return Canada back into deficit in order to support an economy suffering from low prices for oil and other commodities.

After contracting in the first half of the year, the economy grew again in the third quarter. But the final quarter of the year has gotten off to a weak start, evidenced by disappointing export and jobs data released on Friday.

Finance Minister Bill Morneau has sidestepped questions as to whether he would keep his deficits to C$10 billion, and declined to answer reporters' questions on Friday after a cabinet meeting.

CIBC Capital Markets Chief Economist Avery Shenfeld said in a note on Friday that the Liberals should let their initial deficit rise to C$17 billion to give the economy an extra lift.

Trudeau's government laid out its plans in an event known as the Speech from the Throne, which largely repeated the government's campaign promises.   Continued...