November 26, 2008 / 3:40 PM / in 9 years

Canada says stimulus may come sooner than in U.S

OTTAWA (Reuters) - The Canadian government, fending off complaints it is moving too slowly on a stimulus package for the economy, said on Wednesday it would probably deliver its economic boost faster than the United States.

<p>Canada's Prime Minister Stephen Harper talks to the media after the signing of a free trade agreement between Colombia and Canada in Lima November 21, 2008. REUTERS/Enrique Castro Mendivil</p>

Thursday’s fall economic and fiscal update will provide more restraint than stimulus, but there will be new stimulus plans in the budget to be delivered early next year and the budget date will be advanced, an aide to Prime Minister Stephen Harper said.

“In all likelihood, we will actually be acting far faster than the U.S. government is acting,” said the aide, briefing reporters ahead of the fiscal update, on condition of anonymity.

“The president-elect (Barack Obama) does not become president until January 20. Then there’s a legislative process that needs to go on.... Our legislative process tends to move more quickly than the U.S. one.”

Canada’s annual budget is normally delivered in late February or early March ahead of the April 1 start of the fiscal year, but it will now come earlier.

The aide did not say how early but it will not be before Christmas and Parliament does not return from its Christmas break until January 26.

He said the government needed time to craft proper spending plans and to see how the economy is unfolding, and was also looking at what the United States might do.

“We’re looking at moving quickly but it’s also important that we have due diligence around various spending scenarios.”

Opposition parties in Parliament are pressing the government for swift action to rescue the auto industry, help forestry workers, reduce poverty and implement programs to rebuild and improve infrastructure.

Thursday’s update is normally designed to be simply a snapshot of the budget and economy, but Finance Minister Jim Flaherty will include some fiscal measures with accompanying legislation that will require one or more confidence votes.

The minority Conservative government, re-elected on October 14, needs the support of one of the three opposition parties to pass legislation and stay in power. The main opposition Liberal Party has said it would be irresponsible to topple the government at this time.

The Harper aide said one difficulty in crafting Thursday’s update was in coming up with accurate forecasts, given what he called the “unprecedented global economic slowdown and financial crisis, the likes of which we haven’t seen in 80 years.”

“Financial projections, which are normally good for three to four months, right now are good for like a week, two weeks,” he said.

Canada has not run a budget deficit since 1996-97, and looks set to stay in the black this fiscal year too, despite the slowdown.

Thursday’s update will set limits on the growth of “equalization” money that is transferred to many provinces from the federal government, and also impose belt-tightening on politicians and bureaucrats so that Ottawa will “lead by example”, the aide said.

The government has also talked about selling assets to help its budget outlook but the update will not contain any major measures along that line.

($1=$1.23 Canadian)

Editing by Rob Wilson

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