OTTAWA (Reuters) - The Canadian government will curb its spending if necessary due to lower oil prices in order to meet its budgetary plans, Treasury Board President Tony Clement told Reuters on Monday.
The federal government has pledged to balance the budget in 2015-16 but if oil prices continue to be low, they are expected to take a bite out of government revenues
“We continue to monitor the situation very closely, I can assure you of that, and if we have to make changes to our plans, we will do that,” Clement, who is responsible for federal spending, said in an interview.
“But I don’t think the appropriate response is to light our hair on fire and run around in circles. I don’t think anybody wants us to panic. I think everybody wants us to stick to our plan.”
Finance Minister Joe Oliver separately told reporters, ahead of a meeting with provincial finance ministers, that he still expected to run a budget surplus in the coming fiscal year.
Clement said Canadian economic activity was still very robust so far, job growth was strong and the economy’s fundamentals remained strong.
“To an extent, we are a bit of an oasis in a very uncertain world situation,” he said.
Offsetting the lower oil price’s effect on the economy has been strong growth in the United States, which has boosted demand for Canadian non-oil exports.
Cheaper oil also leaves more money in consumers’ hands, and the prospect prompted Quebec Finance Minister Carlos Leitao to tell reporters on Monday that for non-oil provinces it has “the same effect as a big tax reduction.” It has the same effect in the United States and will lead to more imports from Canada.
The political opposition in the Canadian House of Commons has criticized the Canadian government for spending less than it has budgeted in some departments. Clement said he was not going to apologize for underspending.
He said tradition in the previous Liberal governments of Jean Chretien and Paul Martin was to go on a spending spree in March, the final month of the fiscal year, to take advantage of any extra budgetary room before the books were closed.
“We managed to wring out of the system some of the March madness that was the hallmark of the Chretien/Martin years,” he said.
Reporting by Randall Palmer; Editing by Jonathan Oatis