SAO PAULO (Reuters) - The Canadian government will take further action to stabilize credit markets and shore up economic growth if necessary, Finance Minister Jim Flaherty said on Sunday.
“We must remain steadfast and do whatever is necessary to prevent our financial systems from being put in harm’s way by global events,” Flaherty told reporters on a conference call from Sao Paulo, Brazil.
“We are prepared to take further action if needed,” he said at the conclusion of a meeting of G20 finance ministers and central bankers.
Ottawa has so far pledged to buy an initial C$25 billion worth of insured mortgages from Canadian banks to free up their balance sheets for lending. It has also guaranteed wholesale borrowing by its banks in international money markets.
Flaherty has said he has a list of options at his disposal that can be drawn upon if the financial crisis escalates. Automakers and manufacturers have demanded special emergency aid.
Amid forecasts of a stagnating economy next year and a series of federal tax cuts already working their way through the economy, Flaherty urged the provincial governments to stimulate growth by speeding up planned infrastructure investments.
“To the extent that provinces and territories can provide additional stimulus through their policies, that’s a benefit to Canadians overall.”
Stimulus measures by provinces will be on the agenda when Prime Minister Stephen Harper meets with provincial premiers on Monday.
He welcomed a move by China, revealed on Sunday, for a $586 billion stimulus package through 2010. He expected some other emerging economies to also take fiscal stimulus measures, which should increase demand for Canadian commodities.
“Their economies continue to grow but they’re not growing at the rate that was anticipated even two months ago,” he said.
“That’s how significant this economic downturn is, that even the passing of one month creates reduced expectations in terms of economic growth.”
Reporting by Louise Egan, editing by Martin Golan