Canadian Finance Minister Chrystia Freeland on Wednesday pushed back against calls to ease emergency spending, saying the money will help Canada get through the pandemic and prosper in the long run.
Her speech at the Toronto Global Forum comes amid increasing criticism of the government’s unchecked spending after doling out more than Can$300 billion (US$226 billion) in pandemic aid to individuals and businesses, a sum equivalent to 14 percent of GDP.
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“Our citizens and our companies are suffering through no fault of their own. For a government to abandon them at a time like this would be monstrous,” Freeland said.
“And it wouldn’t be just heartless. It would be an economic mistake. That is because our eventual recovery will be faster and more complete, in direct proportion to how much we limit the economic scarring caused by the coronavirus recession.”
Freeland said the government’s fiscally expansive approach to the pandemic would be “limited and temporary.”
But the government has provided no information to back that up.
Prime Minister Justin Trudeau’s Liberals in fact have not presented a formal budget since March 2019 — before the pandemic and the last election in October 2019.
A fiscal update is expected in the coming months, but Trudeau this week said it would not include a plan for a return to a balanced budget.
Ottawa has also abandoned efforts to keep Canada’s debt-to-GDP ratio on a downward trend.
A fiscal snapshot in July said the 2020-2021 deficit would be Can$343.2 billion — more than twelvefold the previous estimate — and since then the government has continued to spend big.
The economy, however, has also improved, with the Bank of Canada revising upward its 2020 growth forecast to -5.5 percent from -7.8 percent in its July monetary policy report, which should increase government revenues.