Canada says fiscal stimulus may come next year

Wed Nov 19, 2008 5:11pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada said on Wednesday it is unlikely to introduce any new economic stimulus measures until next year's budget and said it will slide into a deficit if necessary and curb public sector wage growth.

Finance Minister Jim Flaherty said he would not put stimulus measures in the autumn economic and fiscal update that he will unveil next week.

"We'll look at that as we go up to budget time, not in the fall economic update," he told reporters when asked if he would follow through on Canada's commitment at the G20 summit last weekend to enact fiscal stimulus measures to jolt some life back into a slumping global economy.

Ottawa normally publishes its budget plan in late February or March.

Flaherty said the report next week will not look like a "mini-budget" and will not contain details on government aid to the auto sector.

Tax cuts already announced by the Conservative government plus steps taken by provincial governments represent a stimulus of almost 2 percent of gross domestic product next year, he said.

"And that is before we do anything in addition. If we have to do more, we will do more. If it means we have to run a deficit, we'll run a deficit."

Canada is the only member of the Group of Seven industrialized economies to have posted a sustained budget surplus since the 1990s. But Flaherty said he would break with that trend to shore up the economy, which Canada's top banker on Wednesday could slide into a recession next year.   Continued...

<p>Jim Flaherty, Canadian Minister of Finance, speaks to the media after the federal and provincial finance ministers meeting in Toronto in this November 3, 2008 file photo. REUTERS/Mark Blinch</p>