Canada's Prime Minister Trudeau to forego stimulu; Budget deficit may be C$30bln
Canada's Prime Minister Justin Trudeau has ruled out significant new stimulus funds. The Trudeau-led region will have a budget deficit of C$30 billion ($22.5 billion) and may not announce additional stimulus measures. Its first budget, beginning from 1 April, is scheduled to be unveiled next week.
Canada's Finance Minister Bill Morneau will present the budget on 22nd of March 2016. The new budget is expected to have several promises made during the last elections held in 2015. Canada's budget deficit is projected to be three times of what Trudeau campaigned during the elections.
Bloomberg reports that budget deficit of C$30 billion was in line of announcement made in last month that puts baseline deficit at C$18.4 billion. During elections campaign, budget deficit was put at C$10.5 billion. Prime Minister Trudeau has recently ruled out any significant new stimulus fund as the country needs to be careful on budget deficit.
Prime Minister Trudeau said "I don't think we need massive stimulus. What we need are smart investments that are going to help the economy and the families who need it in the short-term, while creating a path toward greater growth and greater prosperity in the longer term."
Justin Trudeau assumed charge as Prime Minister in October 2015. He has made a promise to run a budget deficit for three years to expand the economy. On the contrary, previous Conservative government promised for a balanced budget plans. The stronger growth of US economy, which is Canada's biggest trading partner, will have positive impact on its economy, as reported by BNN (Business News Network).
Canada Child Benefit and infrastructure development were the major promises made by Trudeau during his elections campaign. Canada Child Benefit is a new social program that envisages direct monetary benefits to low-income families with children. Now, the major focus of the new budget may be on Canada Child Benefit.
The Prime Minister's other major campaign pledge was the infrastructure development, which requires billions of dollars over next four years. Trudeau has been insisting on new investments for the country's infrastructure development. The Canadian government has avoided stimulus package despite the drop in oil price and currency value.
Meanwhile, Canada's Liberal government has clarified that there wouldn't be any announcement on helping trouble-hit Bombardier Inc. Quebec Province, where Bombardier has its headquarters, has announced $1 billion investment in C Series passenger jet project, is seeking same help from Ottawa to protect jobs for thousands of employees, according to Reuters Canada.
The projected budget deficit of C$30 billion is equivalent to 1.5 percent of gross domestic product (GDP). This is a rise of 1.4 percent from previous forecast of 0.1 percent of GDP. Since the end of World War-II, there are four one-year expansionary swings in budget deficit over 1.4 percent of GDP.