Canada Spends Windfall At Own Risk

Posted on Saturday, November 26 at 14:52 by Anonymous
Spending that windfall in a pre-election gambit to win a majority government could pay off politically for the Liberals but their fiscal foundation is now at risk, economists said. "I think the risks have certainly risen we could dip back into deficit in the next couple of years, especially if the U.S. economy got into trouble," BMO Nesbitt Burns economist Doug Porter said. Analysts warned on Thursday that the government was exposing itself to a negative revenue shock if global risks, such as slowing Chinese and emerging market demand for commodities, come to fruition. "We could see commodity prices pull back significantly, the economy slows, federal revenues fall back significantly, and, hey presto, there's a deficit," one market economist said. "Essentially we do not have good fiscal design at this point." http://www.metronews.ca/reuters_national.asp?id=111208 [Proofreader's note: this article was edited for spelling and typos on November 27, 2005]

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