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Ottawa, December 20, 2004
2004-082

Minister of Finance Welcomes Positive IMF Report on Canada

Related document:

• IMF Statement

Minister of Finance Ralph Goodale welcomed the annual Statement of the International Monetary Fund’s (IMF) Mission on Canada, which was released today. The report lauds Canada, especially its fiscal performance, which it describes as the best among the Group of Seven (G-7) industrialized countries.

"This report is a further vindication of the sacrifices made by Canadians to get our nation’s finances back on track over the past decade," said Minister Goodale.

Pointing to Canada’s commitment to balanced budgets, debt reduction and prudent and transparent fiscal policies, the IMF expressed confidence that Canada’s economic performance would again be strong in 2005. It anticipates economic growth to remain at about 3 per cent next year.

The IMF statement commended Canada’s decision to set 25 per cent as an objective for the federal debt-to-GDP (gross domestic product) ratio within 10 years, in light of the added pressures of an aging population. The report stated that Canada is "well on track" to attaining the lowest general government debt-to-GDP ratio in the G-7. In fact, projections by the Organisation for Economic Co-operation and Development support this view, showing that Canada will achieve this by the end of 2004.

The IMF statement also identifies risks to Canada’s performance. Notably, the strength of the Canadian dollar, coupled with a slowing U.S. economy, may "exert a dampening effect" on Canadian exports. Global current account imbalances and slower consumer spending due to low household savings rates also pose risks to the economy.

The IMF statement encourages Canada to work towards a more sustainable and efficient health care system. Although the report acknowledges the stable funding provided by the September 2004 $41-billion, 10-year health care agreement with the provinces and territories, it concludes that more could be done to improve efficiency and control costs.

"The economic and fiscal progress underlined in this report is gratifying, but going forward we cannot take anything for granted," Minister Goodale said. "We must continue to be prudent and balanced in our planning and to do a better job than ever of delivering to Canadians greater value for their hard-earned tax dollars."

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. The IMF will release its full report on Canada next year.

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