The head of the International Monetary Fund (IMF) has praised Canada’s fiscal standing relative to other G7 nations, despite the Liberal government’s plan to increase this year’s deficit. IMF Managing Director Kristalina Georgieva commended Canada and Germany for their stronger fiscal positions during a press briefing at the IMF’s annual meeting in Washington.
Georgieva recommended that Canada leverage its fiscal flexibility to stimulate growth, particularly in key sectors such as housing, infrastructure, and energy. These strategic projects, she noted, could enhance productivity and contribute to economic expansion amid global challenges.
A recent IMF report projected a slowdown in global growth from 3.3% in 2024 to 3.1% in 2026, citing factors like uncertainty, protectionism, and potential financial risks. Canada, impacted by U.S. tariffs, is expected to experience a growth rate of 1.2% this year.
The Liberal government, led by Prime Minister Mark Carney, is preparing to unveil its budget on November 4, emphasizing nation-building initiatives in response to external pressures. While the deficit is projected to increase, the government aims to achieve a balanced operational budget within three years.
Parliamentary Budget Officer (PBO) Jason Jacques recently expressed concerns about the escalating deficit, describing Canada’s financial situation as “stupefying” and “unsustainable.” However, former PBO Kevin Page disputed these claims, asserting that Canada’s fiscal position remains relatively strong compared to other G7 countries.
In a strategic shift, the government will now present all future budgets in the fall and separate operational expenses from capital investments. Despite some criticism of the broad definition of capital investment, the IMF’s Georgieva welcomed the new budgetary approach, highlighting its alignment with sound fiscal practices.