Government denies auto-parts finance request

Tue Oct 28, 2008 2:22pm EDT
 
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OTTAWA (Reuters) - The Canadian government has no plans to meet a request from the auto-parts industry for special financing, Industry Minister Jim Prentice said on Tuesday, arguing that improved general financing is available.

"Effectively the government is doing really already what has been asked for," Prentice told Reuters in a telephone interview.

The industry is seeking up to C$1 billion ($770 million) in short-term loans and loan guarantees from the Canadian and Ontario governments.

Prentice said the government had already authorized a C$2 billion increase in the borrowing capacity of Export Development Canada, and the Business Development Bank was also taking additional measures to improve its ability to get liquidity to Canadian businesses. Both are government-owned.

He also said the recent fall in the Canadian dollar was making life easier in the automotive and manufacturing sectors.

"To be sure, the rapid rise of the (Canadian) dollar was a factor that worked against the Canadian-value proposition in terms of the automotive sector," Prentice said.

"As the dollar sinks relative to the U.S. dollar, it is something that does help the manufacturing sector."

He said the government had encouraged companies when the Canadian dollar was strong to make physical investments in plant and equipment.

"If people have been able to make those investments, at this point they'll benefit from at least the short-term position that the dollar's in," he said.

($1=$1.30 Canadian)

(Editing by Frank McGurty)