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OTTAWA (Reuters) - Finance Minister Jim Flaherty, a key player in Canada's current political crisis, said on Thursday his next budget in January will contain more stimulus and he sees the economic situation worsening.
"There will be some additional stimulus, inevitably, in the budget given that we're seeing deteriorating fiscal conditions around the world," Flaherty said in an interview with CTV television.
Flaherty, who also said he might take steps to improve credit availability in the auto sector, will deliver the budget on January 27.
"We could do more tax cuts, we could do more credit availability. There are challenges in the auto sector with credit availability. The leasing of cars has virtually ended."
The government believes Canada entered a recession in the fourth quarter but Flaherty said his latest forecasts, released just last week, could get worse.
"It's not getting better ... it's quite clear that the situation is getting worse and that's a reality we're going to have to deal with," he said.
Flaherty's fiscal update last Thursday sparked what has become one of Canada's worst political crises. The opposition parties complain the document contained little to help the economy and are particularly galvanized by what they called partisan moves, such as cuts to subsidies of political parties.
In an unprecedented development, the three opposition parties have joined forces and vow to defeat the minority Conservative government in a confidence vote on Monday and form a coalition government. Prime Minister Stephen Harper is widely expected to request on Thursday the temporary suspension of Parliament at least until he can bring in the budget.
Reporting by Louise Egan; Editing by Gary Hill