-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Global Macro Weekly -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI INTERVIEW: Canada Fiscal Guardrail a Distant Goal: Antunes
Canada's pledge to restore "fiscal guardrails" may not be fulfilled soon and end up being weak, leaving doubts about long-term debt sustainability, government adviser and Conference Board of Canada chief economist Pedro Antunes told MNI.
Finance Minister Chrystia Freeland on Monday said fiscal guidelines her Liberal government had veered away from even before the pandemic will return when the job market and other indicators show the economy has moved past the health crisis.
The pandemic will hold back nominal GDP by a cumulative CAD500 billion over the next four years, squeezing personal incomes and tax revenue, said Antunes, who used to work in the central bank's domestic forecasting branch. At the same time, Canada is moving to set up new or expanded social programs, and plans for another CAD100 billion of spending even after the economy stabilizes, he said.
"One of the things that we would have liked to have seen is more of a longer term path, at least we do have a deficit laid out over the next four or five years, and to me the challenge will be post Covid crisis, how do we get the fiscal situation into order," Antunes said of fiscal rules. The budget update showed a record CAD382 billion deficit this year, or 17.5% of GDP, and remaining in the red into 2026.
"These are all very well intended spending programs, but if you're going to put them in place you also need an addition to your revenue stream to be able to afford it," he said. "We can't run these deep deficits forever," said Antunes, who has also testified at Parliament on the economy.
The government's own survey of private forecasters showed it will be some time before the job market is strong enough to raise the guardrails again. The unemployment rate won't return to record lows set before the pandemic through a projection laid out until 2025, instead bottoming out at 6% in 2024.
The government targeted the ratio of debt to GDP before the pandemic and "over the long term need to see that reduced," Antunes said. Other options governments have tried include seeking to balance the budget when the economy is near its peak and balanced budget laws, he said.
Canada should also be aware of the combined federal and provincial debt as a share of GDP, not just the federal debt, and that figure looks on course to reach 90%, Antunes said.
"It would be fiscally prudent to shoot for more of a balanced budget in a stronger economy," he said.
The government appears more likely to return to the goal of lowering the debt-to-GDP ratio, he said, noting that has a big flaw. When the economy shrinks "you have no control over the denominator, and that's just what happened in 2020," he said.
The government has done fine work in quickly rolling out major support to households this year, he said. But its finances may also be squeezed over time if interest rates surge, or if the ability to raise taxes is limited as provincial governments also seek to close their budget gaps, Antunes said.
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.