Canada has the second largest gross government debt of ‘AAA’ rated countries, which is ‘incompatible’ with its gold-plated rating, ratings agency says
The Liberal government’s preference for continued deficits and increasing program spending “could increase the vulnerability of public finances to a faster economic slowdown or sudden shock,” according to Fitch Ratings.
“Modest fiscal loosening and sustained deficits will increase the economy’s exposure to a downturn,” the ratings agency said in its post-budget analysis. However, investors are becoming more cautious and more convinced that the next interest-rate move from the country’s previously hawkish central bank will be more dovish.
The budget also pledges up to $3.9 billion for supply managed dairy, egg and poultry farmers affected by recent trade deals with the Asia-Pacific and Europe. Other big-ticket items include a $300 million zero-emissions car incentive, and a $1.25 billion houses-for-votes program that provides interest-free loans to first-time home buyers through the Canada Mortgage and Housing Corp.
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