February 27, 2012 / 2:39 AM / 6 years ago

Canada's Flaherty says budget not done, Europe fears ease

MEXICO CITY (Reuters) - Ottawa has less reason to delay its upcoming budget because of uncertainty over the European debt crisis, Finance Minister Jim Flaherty suggested on Sunday, but he said the government has still not made up its mind on certain items in the fiscal plan.

“Some things have not been decided quite frankly. I’m not kidding,” Flaherty told reporters in Mexico City following a meeting of the Group of 20 advanced and emerging economies.

“We’ve been quite worried about the situation in Europe. I think this weekend has provided some degree of solace on that subject and the actions that have been taken recently by the euro zone members,” he said when asked to comment on the budget.

Normally due before the end of March, the budget has been the subject of much controversy and speculation in recent weeks because of plans to cut spending and to reform a key pillar of the public pension plan.

The ruling Conservatives have not completed the budget proposal partly for fear its underlying growth assumptions will prove unrealistic if the European debt crisis is not contained.

Flaherty said he was slightly more hopeful that Europe would put up extra money to fight its debt crisis, qualifying for help from the rest of the world through the International Monetary Fund, after hearing from his G20 colleagues at their weekend gathering. <ID:L2E8DQ1OB>

“I’m a little bit more confident, modestly more confident. There’s still a lot of obstacles,” Flaherty said.

The budget is expected to chart a path to eliminate the deficit by 2015-16, and the government has said it will cut the operating budgets of government departments to yield savings of at least C$4 billion a year.

Vague plans to change the Old Age Security (OAS) plan to cope with greater funding requirements as the baby boomer generation retires, possibly by raising the retirement age, has sparked a backlash from seniors groups and in Parliament.

Flaherty would not comment on details of the budget, but said it would explain why certain measures were necessary.

“Sufficient information will be provided so that Canadians have the ability to gauge for themselves the actions being taken by the government and make some informed judgment about the appropriateness of the actions being taken,” he said.

Reporting By Louise Egan; Editing by Richard Pullin

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