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Ottawa, December 9, 2003
2003-062

• International Monetary Fund.

Canada’s economy has proven to be "exceptionally resilient" during the past year and is poised to reap the benefits of a recovery in 2004, the International Monetary Fund (IMF) stated in the annual Statement of the IMF Mission on Canada, which was released today.

"The IMF report reaffirms the value of our government’s balanced approach of prudent fiscal management, coupled with investments to improve our productivity and competitiveness," said John Manley, Deputy Prime Minister and Minister of Finance. "This approach will continue to provide benefits for Canadians in the years to come."

The IMF’s assessment of Canada’s economic, monetary and fiscal policies is contained in the annual Statement of the IMF Mission to Canada. The statement notes that "despite a series of adverse shocks and a weakening of activity this year, most indicators point to recovery in 2004."

The IMF agrees with private sector economic forecasters, who predict that Canada’s economy will grow by "about 3 per cent in 2004." The improved growth prospects have been boosted by low interest rates, which are expected to support continued strength in household spending and residential investment, along with increased investment in machinery and equipment by Canadian companies.

However, the IMF statement points to some potential risks to the current economic outlook. These include the recent rise in the value of the Canadian dollar, which could "weigh more heavily on net exports, business profits and labour market conditions."

As well, the IMF calls on the Government to maintain its focus on balanced budgets and debt reduction, pointing out that "sustained surpluses will be essential in order to ensure fiscal sustainability and intergenerational equity." It adds that in the current fiscal environment, the Government must control its spending and "further efforts to cut existing programs may be necessary."

"The coming year will have its share of challenges," Minister Manley said. "But the events of 2003 clearly showed that Canadians can meet and overcome challenges to produce a strong and dynamic national economy."

As required by Article IV of its Articles of Agreement, the IMF reviews economic developments and policies of each member country, usually on an annual basis. The IMF Mission’s statement is released at the discretion of the country being reviewed. Since 1998 Canada has released this statement in recognition of the importance of the IMF’s economic surveillance activities, and as an expression of Canada’s commitment to ensuring that these activities are transparent.

A copy of the IMF statement is available on the Department of Finance Web site at www.fin.gc.ca. The IMF will release a full report on Canada early next year.

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