International Monetary Fund praises Canada’s COVID-19 economic response plan

Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, welcomed the International Monetary Fund (IMF)’s annual Article IV mission report that found Canada’s strong and decisive actions at the onset of the pandemic “provided crucial support to the economy and the functioning of financial markets, and helped protect lives and livelihoods.” The report remarked on the importance of avoiding premature withdrawal of policy support and welcomed Canada’s adoption of fiscal guardrails.

The IMF noted that “Canada’s strong history of prudent policymaking afforded it the policy space to respond forcefully to the crisis and avert much steeper declines in economic activity and employment.” The report also highlighted the unprecedented size and scope of Canada’s policy actions, which have provided support for households, businesses, and vulnerable groups.

The report drew attention to the importance of enhancing long-term growth in the future and the value of liberalising internal trade.

The IMF observed that the Government of Canada’s recovery plan, which aims to be inclusive, is a welcome step. It also highlighted Canada’s commitment to achieving net-zero emissions by 2050, and commented that Canada’s price on pollution could be a “valuable prototype for an international arrangement among large emitting countries.”

In its report, the IMF forecast real GDP in Canada will expand by 4.4 percent in 2021 as the pandemic is brought under control.

The government is currently consulting with Canadians, Canadian businesses, and experts as it prepares Budget 2021. The government has a growth plan to invest between up to 3 to 4 per cent of GDP, or $70 billion and $100 billion, over the next three years to jumpstart Canada’s recovery, create jobs, and ensure long-term prosperity.

Quotes

“The social, economic, and health impacts of COVID-19 in Canada, and around the world, have been unprecedented. Today’s report from the IMF recognizes the decisive effect our government’s actions have had on stabilizing the Canadian economy and supporting people throughout this crisis. We are squarely focussed on supporting Canadians and fighting to defeat this virus. We will continue to do whatever it takes, for as long as it takes. And we have a plan to provide meaningful investment to build our way out of the coronavirus recession, so our economy comes roaring back stronger than before.”

— The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Quick facts

• The IMF’s annual Article IV missions assess the economic and financial developments in a country and include discussions with government officials, central bank officials, parliamentarians and representatives of business, labour unions, and civil society.
• Canada entered the pandemic in a position of strength, with the lowest net debt-to-GDP ratio among G7 peers, a position it still retains.
• Total support so far includes $322 billion in direct measures to fight the virus and help people; and $85 billion in tax and duty deferrals. This is Canada’s largest economic relief package since the Second World War.