February 15, 2008 / 2:29 PM / in 10 years

Liberals pledge to limit debt payments

OTTAWA (Reuters) - A future Liberal government would limit debt repayments to C$3 billion ($3 billion) a year, applying any fiscal surplus in excess of that to infrastructure, Liberal leader Stephane Dion said on Friday.

He pledged to set a C$3 billion contingency reserve each year which would go to the debt if not used for things like ice storms or floods or economic challenges.

“Today I announce that a Liberal government will invest the entire amount of any future unanticipated surplus that exceeds our C$3-billion reserve into Canada’s infrastructure that so desperately needs renewal,” Dion said in the prepared text of a speech he was giving in Ottawa.

Conservative Finance Minister Jim Flaherty has earmarked at least C$3 billion a year to pay down debt but this fiscal year, ending on March 31, he has pledged to pay down C$10 billion.

Dion said that if he were in power he would instead put C$7 billion of that total towards infrastructure.

Canada is the only country in the Group of Seven leading industrialized countries to be running fiscal surpluses.

Unallocated surpluses automatically go to the debt. But both Liberal and Conservative governments have sometimes put some surplus money into trust funds, booking the expenditure before the end of the fiscal year in which there is a surplus.

The trust fund can then dole out money in future years without affecting future budget balances. The country’s auditor-general has criticized this practice.

Reporting by Randall Palmer; Editing by Renato Andrade

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