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Canada economy better placed than most: IMF

Financial Post
March 11, 2009

OTTAWA -- Canada is better placed than most countries to weather the global recession due to a ""strong fiscal package" and healthy financial sector, the International Monetary Fund said in a report Wednesday.

"With the global outlook marked by unusually high uncertainty, Canada has prudently taken proactive steps and should stand ready to act further in case downside risks appear," the Washington-based IMF said.

"The rapid deterioration in the global environment is affecting Canada through its strong international linkages.

"Weakening global demand has prompted a retreat in commodity prices, with effects particularly on the Western provinces. Global financial strains have also spilled over to Canada, although its financial system is faring better than many abroad."

The IMF said "the strong fiscal package announced in January, which was large, timely and well targeted, . . . will buoy demand during the downturn," adding that Canada's economy is expected to weaken further in the coming month "before picking up on the back of the policy stimulus already in train."

Finance Minister Jim Flaherty welcomed the IMF's support for the government's $400-billion stimulus package outlined in the Jan. 27 budget, which is still to receive final parliamentary approval, and the organization's report emphasizes the need to get the stimulus spending into the economy.

"And I urge the Senate to pass the bill so we can get the job done," he told reporters Wednesday.

Mr. Flaherty also said Wednesday that the global financial crisis will be on Canada's agenda during the G20 finance ministers' meeting this weekend in Britain, which will lay the groundwork for a summit of G20 leaders in early April.

"We're going to emphasize the need, the imperative of the United States to fix its banking system, and the Europeans to fix their bank system because we have to get the banking systems functioning properly in order to help reasonable access to financing and credit internationally," he said.

He said Canada will also push G20 members to do "what we agreed upon earlier -- to spend 2% of GDP on stimulus over next two years."

"We've done more than that here in Canada and we're going to encourage our partners strongly to do the same thing," he added.

On Tuesday, Prime Minister Stephen Harper said Canada was the last advanced country to succumb to the economic downturn, and will come out of it "faster than anyone and stronger than ever."

Mr. Harper added that the Canadian economy "will not turn the corner on this global recession until the American financial sector crisis is fixed."

"Our stimulus plan will help us to sustain economic activity and make transitions but it cannot fix the problem of the global financial system," he said.

Meanwhile, Flaherty announced Wednesday that a government website,, has been launched to inform the public about the progress of the stimulus spending. "People will be able to look day by day and see what projects in their community, in their part of the country are proceeding, what projects are funded, what stage the projects are at and we'll keep that updated as we go forward."

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