OTTAWA, July 9 (Reuters) - Canada still aims to reduce its debt-to-GDP ratio to 25 percent, Finance Minister Jim Flaherty said on Thursday, but he could not say how long it might take to reach that goal, which was abandoned during the recession.
Before the global financial crisis, the Conservative government had pledged to reach the 25 percent target by 2011-12. But the budget in January of this year said the debt-to-GDP ratio would rise to about 32 percent in March 2011 from 29 percent and there was no reference at all to the 25 percent target.
Global policymakers and the International Monetary Fund and other institutions are urging governments to map out clear strategies for unwinding the unprecedented spending measures unleashed to combat the recession. Ottawa will address the issue in its fiscal update this autumn, Flaherty said.
'My priority now is ... to get back to the 29 percent ratio as the first priority, which is where we had been, and then work our way back down to that 25 percent ratio over time,' he told reporters on a conference call from Brazil.
'We were at 29 pct, we will go up to about 32 percent or so and then gradually get back down to about 29 percent over the course of several years as we move back into surplus,' he said.
Canada's independent budget officer produced a report this week that raised doubts about the government's ability to balance the books as promised in 2013-14 and called for a debate on new fiscal targets.
The budget officer, Kevin Page, forecast much larger deficits in coming years than the government and sees a structural deficit of C$12 billion that will linger beyond the five-year horizon unless there are tax hikes or spending cuts.
Flaherty flatly rejected Page's assertion, calling him 'on the pessimistic side' and said his report did not reflect the upbeat assessment of the International Monetary Fund and others.
Echoing Prime Minister Stephen Harper, who sided with Germany at the G8 summit this week in rejecting further stimulus spending, Flaherty ruled out a second stimulus package for now.
'Certainly I don't think the time is here where we would consider further stimulus spending. The key is to get the spending out the door,' he said.
At the same time, he warned that job losses would inevitably get worse for some time to come.
He declined to comment on Canada's June employment report due on Friday, which is expected to show another 35,000 jobs lost that month and the unemployment rate at an 11-year high of 8.7 percent.
(Reporting by Louise Egan; editing by Peter Galloway) Keywords: CANADA ECONOMY/STIMULUS (louise.egan@thomsonreuters.com; +1 613 235-6745; Reuters Messaging: louise.egan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Before the global financial crisis, the Conservative government had pledged to reach the 25 percent target by 2011-12. But the budget in January of this year said the debt-to-GDP ratio would rise to about 32 percent in March 2011 from 29 percent and there was no reference at all to the 25 percent target.
Global policymakers and the International Monetary Fund and other institutions are urging governments to map out clear strategies for unwinding the unprecedented spending measures unleashed to combat the recession. Ottawa will address the issue in its fiscal update this autumn, Flaherty said.
'My priority now is ... to get back to the 29 percent ratio as the first priority, which is where we had been, and then work our way back down to that 25 percent ratio over time,' he told reporters on a conference call from Brazil.
'We were at 29 pct, we will go up to about 32 percent or so and then gradually get back down to about 29 percent over the course of several years as we move back into surplus,' he said.
Canada's independent budget officer produced a report this week that raised doubts about the government's ability to balance the books as promised in 2013-14 and called for a debate on new fiscal targets.
The budget officer, Kevin Page, forecast much larger deficits in coming years than the government and sees a structural deficit of C$12 billion that will linger beyond the five-year horizon unless there are tax hikes or spending cuts.
Flaherty flatly rejected Page's assertion, calling him 'on the pessimistic side' and said his report did not reflect the upbeat assessment of the International Monetary Fund and others.
Echoing Prime Minister Stephen Harper, who sided with Germany at the G8 summit this week in rejecting further stimulus spending, Flaherty ruled out a second stimulus package for now.
'Certainly I don't think the time is here where we would consider further stimulus spending. The key is to get the spending out the door,' he said.
At the same time, he warned that job losses would inevitably get worse for some time to come.
He declined to comment on Canada's June employment report due on Friday, which is expected to show another 35,000 jobs lost that month and the unemployment rate at an 11-year high of 8.7 percent.
(Reporting by Louise Egan; editing by Peter Galloway) Keywords: CANADA ECONOMY/STIMULUS (louise.egan@thomsonreuters.com; +1 613 235-6745; Reuters Messaging: louise.egan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.