Canada has firepower to invest billions in green transition, analysts say – by Steve Scherer (Reuters – February 24, 2023)

OTTAWA, Feb 24 (Reuters) – Canada has the firepower to invest billions of dollars in the green transition over the coming years to make it more competitive with the United States, analysts said, while also ensuring its public finances stay on a sustainable path.

Prime Minister Justin Trudeau has fiscal room in this year’s budget because tax revenue has held up, COVID-19 pandemic supports have ended and the economy is performing better than previously expected, said Randall Bartlett, senior director of Canadian economics at Desjardins.

“When I look at the long-term trend in the debt-to-GDP ratio, it’s trending down,” Bartlett said. Because nominal growth is forecast to be weak in the 2023/24 fiscal year, the ratio might creep up before heading downward again. Bartlett called it “just a blip on the path.”

Finance Minister Chrystia Freeland has targeted a declining net debt-to-gross domestic product (GDP) ratio each year to assure financial markets that the government has spending under control.

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