Ottawa Economic Statement |  An update in a conflictive context

Ottawa Economic Statement | An update in a conflictive context

(Ottawa) Finance Minister Chrystia Freeland will present her diagnosis on the state of health of the Canadian economy and the bleaker outlook she foresees for the coming months on November 3 when she presents her economic statement in the House of Commons.

Posted at 8:00 am

Joel-Denis Bellavance

Joel-Denis Bellavance

Minister Freeland will present her financial statement in a very difficult context. Inflation remains high, interest rates are rising, the economy is showing signs of slowing down and the NDP, which has reached a political deal guaranteeing the survival of the Liberal minority in the House of Commons until June 2025, is pushing increased spending to strengthen the social system. safety net, including the employment insurance program, among other things.

The provinces are not left out. They have just launched a new national campaign to force Ottawa to substantially increase ($28 billion per year) health transfers while the health network is more fragile than ever after two years of pandemic.

METERme Freeland will also file his plea at a time when the financial situation is just beginning to improve in Ottawa. The federal government posted a budget surplus of $3.9 billion (see below) for the first five months of fiscal year 2022-2023 (April to August), compared to a deficit of $57.2 billion for the same period of 2021-2022.

Over the last few weeks, Minister Freeland has made numerous statements in order to prepare the ground for the announcement of bad news on the economic front.

He argued that the Canadian economy is about to go through a new period of turbulence due to the strong increase in the key rate of the Bank of Canada, which is trying to curb inflation that remains above the target range of 2% to 3%.

This sharp increase in interest rates will inevitably cause a slowdown that will affect families, workers and businesses, as well as increasing borrowing costs for those planning to buy a home or a vehicle.

There will be no help for everyone.

He also said that the government will not be able to give everyone a financial boost, as happened during the pandemic, and that Ottawa must impose greater budgetary rigor so as not to fuel ‘inflation’.

Finally, he warned his fellow cabinet members that they will have to tighten their belts. They will have to fund any new programs they propose from their department’s current budget.

But the minister never uttered the word “recession”, despite the fact that many economists maintain that the country cannot escape from it.

This week, the Bank of Canada raised its benchmark rate for the sixth time this year, with the half-point rate hike taking its benchmark rate to 3.75%.

In its latest monetary policy report, the institution revised its economic projections. It pays attention to the fact that the croissance économique stagne d’ici la fin de cette année et au cours des deux first quarters of 2023, avec une croissance comprise between 0 and 0.5%, avant de gagner du terrain au second quarter of next year. He also noted that a slight shrinkage is just as likely.


Rachel Bendayan, Parliamentary Secretary to the Chancellor of the Exchequer and Member of Parliament for Outremont, in the House of Commons on Friday

In the House of Commons on Friday, the finance minister’s parliamentary secretary, Rachel Bendayan, argued that the economic statement will show that the Trudeau government intends to exercise budgetary discipline. “This economic update is going to be fiscally responsible. We have one of the lowest deficits in the world. We are at a 1% deficit. We were fiscally responsible in our April budget. We always will be, and we will also be there to help Canadians during this period of economic instability,” she said.

According to Robert Asselin, Senior Vice President of the Business Council of Canada, fiscal discipline is particularly important as the country faces high inflation, rising interest rates and weak economic growth.

“The focus now needs to be on fiscal prudence to ensure the central bank can bring inflation back into its target range,” said Asselin, who was a close associate of former finance minister Bill Morneau.

Surplus of 3.9 billion in Ottawa

The federal government posted a $3.9 billion surplus for the first five months of its 2022-2023 fiscal year. In its monthly financial review, the Ministry of Finance indicated that this surplus was recorded between the months of April and August compared to a deficit of 57.2 billion in the same period last year. Government revenue for the period totaled $177.2 billion, up from almost $149 billion a year ago, thanks to a general improvement. Program expenses, excluding net actuarial losses, were $154.5 billion, compared to $190 billion in the same period last year. Public debt charges totaled almost $14.8 billion for the period, up from almost $9.7 billion. Net actuarial losses totaled nearly $4.1 billion, down from $6.4 billion in the prior year.

the canadian press

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