Canada still sees budget surplus despite cheap oil

Sun Nov 30, 2014 7:28pm EST
 
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OTTAWA Nov 30 (Reuters) - Canada still should return to a healthy budget surplus in the next fiscal year despite the precipitous slide in oil prices, Finance Minister Joe Oliver said on Sunday.

In an interview with Global News' television program "The West Block," Oliver also signaled that the high debt levels households are carrying did not overly concern him.

On Nov. 12, Oliver presented a fiscal update that projected a surplus of C$1.9 billion ($1.7 billion) for the fiscal year that starts next April, after accounting for lower oil prices up to that point and for a package of family tax cuts and benefits.

Oliver revealed on Sunday that a subsequent infrastructure spending announcement would still leave a surplus of C$1.6 billion, plus a contingency reserve of C$3 billion.

"So we're comfortable we're going to have a surplus," he said, adding that the government would be monitoring the effect of oil prices, which have slid further since Nov. 12.

At one point he had been projecting a surplus of C$9 billion for 2015-16, he said.

Canada is an important oil exporter, and Oliver said that while it was clear lower oil prices would affect the fiscal picture, they also give consumers more money to spend and to save and they help manufacturers.

And, he said, to the extent that lower prices stem from increased supply in the United States, that helps the U.S. economy and indirectly benefits the Canadian economy because of its reliance on exports to the United States.

In regard to Canada's high household debt, he said he was aware that interest rates were at a historic low but said that while he does not forecast rates, the Bank of Canada has said it was not contemplating any major rate changes in the near future.

"So we think things are in pretty good shape for Canadians. The major risks actually are external," he said.

($1=$1.14 Canadian) (Reporting by Randall Palmer; Editing by Eric Walsh)