Canada would enjoy more stability, predictability under Biden: Chretien
Former prime minister Jean Chrétien is warning that Canada’s path back to a balanced budget will be complicated and challenging, as the country faces a massive deficit from the cost of battling the effects of COVID-19.
“I’ve done it, and somebody else will have to do it, but … it’s not easy to do,” Chrétien told BNN Bloomberg’s Amanda Lang on Friday, referring to his own experience as prime minister from 1993 to 2003.
Canada's deficit is expected to reach $328.5 billion this year, which includes an estimated $225.9 billion in emergency aid in response to the pandemic, according to the latest report from the Parliamentary Budget Officer.
Chrétien’s government inherited a federal deficit of about $40 billion, accounting for 6.2 per cent of GDP, after the Liberal Party replaced Brian Mulroney’s Conservative government.
At the time, the Chrétien government cut various programs to get spending under control and had to service much higher interest rates than what Canada faces today.
“When I left, we were the best of the G7. We had reduced the debt and the interest rates had been cut in half. You can solve [the deficit], but it’s tough to do,” Chrétien said.
“I still have some scars on my body because of it.”
Despite the current low-rate environment, Chrétien added the federal government faces an uphill battle with no guarantee of low borrowing costs for longer.
“If interest rates go up very rapidly, (Canada) will be cornered,” Chrétien cautioned.
BNN Bloomberg Picks
Climate change ‘calling into question the very existence’ of Canada’s property, casualty insurance
Here are tips if you worry about capital gains tax hike
Hudson's Bay steps into booming resale marketplace
Twitter adds Bitcoin tipping, pushes further into NFTs
Lululemon to outfit Canadian Olympic, Paralympic athletes through 2028 Games
Toronto broker laughs at Liberals' plan to improve housing affordability