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Ottawa, February 16, 1995
1995-015

Canada's Minister of Finance Surprised at Moody's Action before Budget

Finance Minister Paul Martin today expressed surprise at Moody's decision to put Canada's debt under review shortly before a planned federal budget.

"The government realizes that strong fiscal action is required", the Minister said. "We are taking fundamental action in the upcoming budget to meet our fiscal targets, and to stabilize the debt to GDP ratio. This will be done largely by cutting expenditures and on the basis of prudent economic assumptions".

Mr. Martin reiterated that "the government's deficit reduction target of 3 per cent of GDP by 1996-97 is an interim target. Our objective is to eliminate the deficit and to set the debt to GDP ratio on a downward course".

"I am confident that the budget will address the concerns expressed by financial markets," he said. "We're going to break the back of this problem".

The Minister noted that "Canada's economic fundamentals are positive; inflation is the lowest in the G7, export growth is strong, the current account deficit is being substantially reduced and labour productivity is high and rising. Our competitive position is very good".

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For further information:

Suzanne McKellips
Financial Markets Division
(613) 992-5259