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MNI (Ottawa)
OTTAWA (MNI)

Canadian Prime Minister Justin Trudeau said Wednesday he will press ahead with expanded relief programs in an economic relaunch speech on Sept. 23, declining questions about restoring any fiscal anchor to what's already a record budget deficit.

Trudeau said he doesn't want to trigger an early election that could come if all three opposition parties reject his government's "Throne Speech" later this month. At the same time, he recently took the extraordinary step of suspending Parliament to trigger a confidence vote on his economic plan within days of the main opposition Conservative Party naming a new leader.

"Every step of the way, we will continue to be there for Canadians," Trudeau told reporters in Toronto, saying it's wrong to oppose help for families in need. He also said like the BOC did earlier today that the economy faces a long recovery following the pandemic.

Bigger spending will likely win support from some left-leaning NDP or Bloc Quebecois members of Parliament, leaving the main risk to Canada's credit rating. The already CAD343 billion deficit reported in July followed Fitch stripping Canada of its top grade. The ratings company warned of another downgrade after another CAD39 billion of more recent outlays if there's no medium term fiscal restraint.

Canada's last fiscal anchor was keeping debt to GDP around 30%, abandoned during the pandemic, and former officials have told MNI the ratio could exceed 60% in a hurry. Still, investors keen for relatively safe assets have kept federal bond yields near record lows this year, along with the BOC's QE program of at least CAD5 billion a week of federal debt.

MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com

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