WAKEFIELD, Quebec (Reuters) - Canada is on track to balance its budget by 2015-16 and the Conservative government anticipates no major shift in policy or new spending cuts to achieve that goal, Finance Minister Jim Flaherty said on Wednesday.
“We will do what it takes to balance the budget in 2015-16, not for the sake of balancing the budget, but to put Canada in a position of strength so we can react adequately to any sort of economic pressure that comes from outside our country,” Flaherty said on the sidelines of a policy retreat in Wakefield, Quebec.
Canada survived the recession better than most advanced industrialized economies, a fact that the Conservatives will likely wield during the 2015 election campaign. Polls show they trail the opposition Liberals led by Justin Trudeau.
The center-right, low-tax Conservatives have long trumpeted what they say is their good record on the economy. They have promised to balance the budget before the 2015 election.
The government is forecasting a deficit of C$18.7 billion in 2013-14 and a shortfall of C$6.6 billion in 2014-15.
Flaherty told reporters that anyone “looking for anything startling” from the Finance Ministry would be disappointed, also making clear he would not boost spending.
He said the government had the leeway to balance the books despite potential costs from severe flooding in the western province of Alberta in June as well as from a major train disaster in Quebec in July.
Flaherty said he was concerned about the below-par growth in Europe and the United States, but he declined to comment on what might happen to the Canadian economy if the U.S. Federal Reserve started to pare back its monthly bond purchases this year.
“I‘m not a big fan of so-called fiscal easing ... it’s not something we’ve done in Canada,” he said, predicting the issue would be raised at a summit of the Group of 20 leading and emerging economies in Russia next month.
“This is a contentious issue ... the danger in the longer term to me as a finance minister is inflation,” he said.
Flaherty said he hoped the G20 would come up with a plan to encourage European nations and the United States to balance their budgets in the medium term.
He also said he was prepared to crack down again on mortgage lending if needed, but at present had no plans to do so.
The government has tightened mortgage rules four times since 2008 amid fears that housing prices were rising too fast.
Additional reporting by Alastair Sharp; editing by Janet Guttsman, G Crosse