February 2, 2017 / 5:50 PM / 2 years ago

Canada risks missing expected infrastructure boost: watchdog

OTTAWA (Reuters) - Canada’s government has found projects for only a small amount of its planned infrastructure spending, putting at risk the likelihood the economy will see as much of a boost as expected, the country’s parliamentary budget watchdog said on Thursday.

Of the C$13.6 billion ($10.45 billion) in infrastructure spending for the fiscal years 2016-18 that the government announced, departments have identified just C$4.6 billion worth of projects, the Parliamentary Budget Officer (PBO) said in a report.

The Liberals, which made stimulating the economy through infrastructure spending a major part of their successful 2015 election campaign, had forecast that first chunk of stimulus will raise gross domestic product by 0.2 percent in fiscal 2016-17 and 0.4 percent in 2017-18.

“Because of the gap between funds that have been announced and the value of projects identified, the government is at risk of not realizing this projection,” PBO said.

The economy was hit hard by the drop in oil prices that put it in a brief recession in 2015. While the economy has recovered some momentum, it faces a number of headwinds, including the possibility of a change in trade policy in the United States, Canada’s biggest trading partner.

If the Canadian government does not see the boost to the economy it had expected from its measures, that could put a strain on its financial situation.

For the government to achieve the economic impact it had forecast, it needs to disburse about C$11 billion in infrastructure investments by the end of March 2018, when the fiscal year ends, the report said.

Earlier on Thursday, Minister of Infrastructure Amarjeet Sohi officially launched two funding programs for municipalities that were included in last year’s budget. The government is expected to release its next budget in the coming months.

Reporting by Leah Schnurr; Editing by Phil Berlowitz

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