January 9, 2009 / 3:17 AM / 9 years ago

Canada sees big job losses, need for more credit

<p>Canadian Finance Minister Jim Flaherty gestures as he speaks with the media in Montreal, January 6, 2009. REUTERS/Christinne Muschi</p>

TORONTO (Reuters) - Finance Minister Jim Flaherty warned on Friday of significant Canadian job losses in 2009 and said he was not ruling anything out as he prepares a stimulus package for a budget that he said would run a large deficit.

“We’re in for a very difficult year,” the Conservative government minister said. “We are going to have substantial job losses. We need to respond to the needs of people who will lose their jobs this year.”

In addition to preparing his January 27 budget, Flaherty is also trying to help get credit moving again and said a working group of government agencies was meeting with Canada’s big banks on Friday to improve credit access, particularly where there are gaps.

“We hope that the private sector will work well with us to fill those credit gaps in Canada this year,” he said.

“We’re prepared to work with the banks to do whatever we have to do to increase the availability of credit in Canada, including car credit.”

The agencies in the working group include Export Development Canada, the Business Development Bank, Farm Credit Canada and Canada Mortgage and Housing Corp.

“There is a recognition that we have a synchronized global recession,” Flaherty. “We are in uncharted waters. There’s a high degree of uncertainty. Fortunately in Canada we have one of the strongest financial systems, if not the strongest, in the world.”

Flaherty reiterated that his budget would run a substantial deficit, ending 12 years of surpluses.

Asked if his Conservative government might cut checks to Canadians as President George W. Bush did to stimulate the U.S. economy last year, he indicated he was leaning more toward tax cuts.

“I‘m not going to start ruling out options. I can tell you what we’ve in fact been looking at is what we’ve been hearing from Canadians in consultations like this,” he told reporters before heading into pre-budget consultations.

“That is that we should be looking at, of course, infrastructure spending...and tax measures. Those are the two primary areas of stimulus with respect to which we’ve been receiving advice.”

Additional reporting by Louise Egan; writing by Randall Palmer; editing by Peter Galloway

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