Canada sets new deadline for spending stimulus cash
OTTAWA (Reuters) - The Canadian government set a new two-month deadline on Wednesday for the country's provinces to line up projects to be funded by stimulus cash, and committed to a firm schedule for winding up the emergency spending it pledged after the economy dropped into recession.
In its fourth quarterly update on its two-year C$47 billion ($45 billion) stimulus package, Ottawa reiterated its forecast of a record high 2009-10 budget deficit of C$55.9 billion. But it vowed to cut the deficit in half in two years just by winding down its economic stimulus plan.
The minority Conservative government headed by Prime Minister Stephen Harper intends to end stimulus spending at the end of March 2011.
For infrastructure projects -- which account for C$16 billion of the total -- to completed by that deadline, spending commitments by the federal and provincial governments must be in place by the end of January, it said.
Facing political backlash for allegedly dragging its feet on construction projects, Ottawa warned the provinces to "use it or lose it."
"If money is not used, then we can use it in other parts where we might need it," Finance Minister Jim Flaherty told reporters following a speech in Winnipeg. "There may have to be some shifting around of funds, if money isn't spent by March 2011."
Flaherty said the unused funds could be used where most needed -- such as to expand benefits for the unemployment -- or in programs that have already absorbed 100 percent of their allocated money, such as university infrastructure projects.
Under the stimulus program, the federal government must negotiate funding with provincial and municipal governments. It estimates that when all levels of government spending are included, the funding committed for stimulus measures will total C$62 billion.
Official data shows the bulk of the stimulus money will be spent in the 2009-10 fiscal year, analysts said. Continued...