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Ottawa, March 2, 1995
1995-020
Minister Responds to Standard and Poor's Bond-Rating Decision
Finance Minister Paul Martin today noted that Standard & Poor's has affirmed the credit rating of all of the Government of Canada's debt. However, he expressed disappointment with S&P's decision to place Canada's foreign currency debt on negative outlook.
The S&P negative outlook relates only to $7.9 billion (in U.S. dollars) of Canada's long-term foreign currency debt, and about $7.4 billion (in U.S. dollars) in Crown corporation debt, guaranteed by the government of Canada.
"The negative outlook simply reflects the fact that Canada has a debt problem. We know that. The budget took action to put Canada's debt-to-GDP ratio on a permanent downward track and we intend to make sure it stays on that track," the Minister said. "Overwhelmingly, market analysts responded favourably to the budget, confidently stating that the government has taken strong measures to meet its deficit targets. With the budget, the government has put in place a credible plan using prudent economic assumptions and substantial contigency reserves which will continue to bring the deficit down and turn the corner on the build-up of our debt."
The Minister added that the February 27 federal budget outlined measures which will achieve $29 billion in cumulative savings over the next three fiscal years. Actions taken in the budget will bring the deficit down to $32.7 billion in 1995-96 and to $24.3 billion in 1996-97, meeting the government's interim deficit target of 3 per cent of GDP. The measures will bring a decline in the debt-to-GDP ratio for only the second time in two decades.
On the basis of average private sector forecasts of interest rates and income growth, Canada's 1996-97 deficit could fall even further, to below $19 billion, which would result in a more rapid decline of the debt-to-GDP ratio in 1996-97 and future years.
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For further information:
Suzanne McKellips
Financial Markets Division
(613) 992-5259
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| Last Updated: 2002-11-26 |
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