January 14, 2014 / 2:08 PM / 4 years ago

Canada set to introduce balanced budget law

TORONTO (Reuters) - Canada’s upcoming federal budget will follow through on a promise to introduce legislation requiring balanced budgets and a two-year spending freeze on government operating spending, the country’s junior finance minister said on Tuesday.

Kevin Sorenson, secretary of state for finance, said in a speech that after the budget deficit is eliminated, a goal set for 2015, the Conservative government would look at more tax cuts and other forms of support for businesses.

“Like its predecessors, (the federal budget) will continue to focus on controlling spending and using every tax dollar as efficiently as possible,” Sorenson told a business audience.

“And we will enshrine our responsible, prudent approach into law, with the introduction of balanced budget legislation,” he said.

The promise of legislation requiring governments to run a surplus except in times of economic crisis was first made in a major policy speech on October 16, along with the vow to freeze spending temporarily.

Canada is one of a handful of countries with a prized triple-A credit rating from leading agencies, and barring any major economic upsets the government looks set to make good on a promise to eliminate its small fiscal deficit before the next election in 2015.

The Conservatives ran up huge deficits following the global financial crisis, amounting to 3.6 percent of gross domestic product in 2009-10.

The gap is currently at about 1 percent of GDP, but Sorenson warned that “an uncertain and fragile global economy” could still derail Ottawa’s plans.

Finance Minister Jim Flaherty is aiming to present the next budget in early February, officials have said, but the exact date has not been confirmed.

Sorenson said the budget would freeze government operating spending for the 2014-15 and 2015-16 fiscal years and review the government’s corporate assets for items it could potentially sell.

Once the government is back in the black, he said it would consider further tax cuts, although he did not give details.

“That includes looking at further tax relief and new ways to provide support to businesses like yours, following the return to a balanced budget,” he said.

Writing by Louise Egan; Editing by Jeffrey Hodgson and Sofina Mirza-Reid

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