The Chief of the International Monetary Fund (IMF) has stated that Canada is in a favorable fiscal position compared to other G7 nations, despite the Liberal government planning to have a higher deficit this year. IMF Managing Director Kristalina Georgieva addressed the fiscal health of advanced economies during a press conference at the IMF’s annual meeting in Washington.
Georgieva highlighted that while some countries are facing significant fiscal challenges, others, including Germany and Canada, are in a better position. She emphasized that Canada should leverage its fiscal flexibility to stimulate growth, especially in key sectors such as housing, infrastructure, and energy, by undertaking strategic projects to enhance productivity.
The IMF recently published a report projecting a global growth slowdown from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. The report warned of potential risks to growth, including prolonged uncertainty, protectionism, labor supply disruptions, fiscal vulnerabilities, financial market corrections, and institutional erosion.
Canada has felt the impact of tariffs imposed by U.S. President Donald Trump, leading to a projected growth rate of 1.2% for this year. The Liberal government is expected to present its budget on November 4, the first under Prime Minister Mark Carney, who took office in April.
Despite Georgieva’s positive remarks on Canada’s fiscal stance, the interim Parliamentary Budget Officer (PBO) Jason Jacques expressed concerns about the country’s finances, describing them as “stupefying,” “shocking,” and “unsustainable.” Former PBO Kevin Page disagreed with Jacques, asserting that Canada’s fiscal position relative to other G7 nations is relatively strong and sustainable.
The Liberals recently announced a change in the budget presentation schedule, moving all future budgets to the fall and separating operational spending from capital investments. Finance Canada’s definition of capital investment has raised some concerns, but Georgieva welcomed the new budgetary framework, calling it a “welcome” change in budget cycle management.