In Depth
Federal Budget 2008
Storm clouds ahead, but country can weather them: Flaherty
Smaller surpluses seen
February 26, 2008
CBC News
Finance Minister Jim Flaherty (Fred Chartrand/Canadian Press)
Finance Minister Jim Flaherty said Tuesday he believes Canada is "well positioned to weather any sudden economic storms."
In his budget speech, Flaherty said the country is facing several factors from abroad that will impact our economy, including a slowdown in the United States and volatility in financial markets.
"There are challenges on the horizon. We are seeing increased global uncertainty," the finance minister said in his budget speech.
The upshot is that the Canadian economy is expected to grow more slowly over the next two years.
However, CIBC World Markets chief economist and chief strategist Jeff Rubin agreed with Flaherty's assessment of the health of Canada's economy. Rubin pointed out that Canada currently has the lowest debt-to-GDP ratio among the countries of the G-7.
In its latest outlook, the Bank of Canada sees the national economy growing by a relatively slow 1.8 per cent in 2008 and by a healthier 2.8 per cent in the following year.
Facing such a slowdown, the government is projecting much smaller surpluses than it has been witnessing in recent years.
The government said $10.2 billion would go toward debt repayment in 2007-08, with plans to put another $2.3 billion and $1.3 billion to cutting the debt in the following two years.
Looking out to 2010-11 and the subsequent two years, the Conservatives envision putting $3 billion annually toward the debt.
The budget projects that Canada's overall federal debt will decline from $457.1 billion in 2007-08 to $444.5 billion by 2012-13.
Canada's federal debt-to-GDP ratio is expected to slide from 29.9 per cent in 2007-08 to 23.6 per cent in 2012-13, according to Flaherty's latest spending plan.
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