Flaherty need not cut aggressively
BMO Nesbitt Burns wonders today why there's so much fuss over the need by Canada's finance minister to slash aggressively in his upcoming budget.
Deputy chief economist Douglas Porter notes that Canada's finances are in much better shape than anticipated in its current fiscal year, its deficit narrowing by almost $10-billion in the first nine months to $17.7-billion from $27.4-billion a year earlier.
The fiscal year ends March 31, and Finance Minister Jim Flaherty is preparing his next budget, expected in about a month.
"Even if we assume no further gains in the final three months of fiscal year 2011-2012, and even allow for some slippage, the full-year deficit will still come in at around $25-billion, or less than 1.5 per cent of GDP," Mr. Porter said in a research note.
"That compares with a $33.4-billion gap the prior year, the latest estimate of $31-billion for this year, and even below the forecast of $27.4-billion for next year. For all the talk about Ottawa preparing to cut more aggressively, it’s fair to again to ask ... precisely why? The current plan seems to be working quite well all by itself."
As The Globe and Mail's Bill Curry reported this weekend, Mr. Porter is not alone among economists in believing there's little pressure on Mr. Flaherty for deep cuts.
Original Article
Source: Globe
Author: Michael Babad
BMO Nesbitt Burns wonders today why there's so much fuss over the need by Canada's finance minister to slash aggressively in his upcoming budget.
Deputy chief economist Douglas Porter notes that Canada's finances are in much better shape than anticipated in its current fiscal year, its deficit narrowing by almost $10-billion in the first nine months to $17.7-billion from $27.4-billion a year earlier.
The fiscal year ends March 31, and Finance Minister Jim Flaherty is preparing his next budget, expected in about a month.
"Even if we assume no further gains in the final three months of fiscal year 2011-2012, and even allow for some slippage, the full-year deficit will still come in at around $25-billion, or less than 1.5 per cent of GDP," Mr. Porter said in a research note.
"That compares with a $33.4-billion gap the prior year, the latest estimate of $31-billion for this year, and even below the forecast of $27.4-billion for next year. For all the talk about Ottawa preparing to cut more aggressively, it’s fair to again to ask ... precisely why? The current plan seems to be working quite well all by itself."
As The Globe and Mail's Bill Curry reported this weekend, Mr. Porter is not alone among economists in believing there's little pressure on Mr. Flaherty for deep cuts.
Original Article
Source: Globe
Author: Michael Babad
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