Canada: 2008 Article IV Consultation-Staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion
IMF Staff Country Reports, February 25, 2008
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- Canada: 2008 Article IV Consultation-Staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion
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Bibliographic details
- Published: February 25, 2008
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451807059.002
Macroeconomic performance and outlook
- Canada has enjoyed high growth while adjusting smoothly to commodity price gains, currency appreciation, and, more recently, slowing U.S. demand.
- The budgetary overperformance provides room for tax relief while maintaining small budget surpluses.
Monetary policy assessment
- Monetary policy has appropriately shifted to guarding against increasing near-term downside risks.
- Inflation considerations cited include "core inflation" and "headline inflation" as part of the monetary context.
Fiscal framework and public debt
- A sound fiscal framework policy has produced an enviably strong fiscal position that makes eliminating general government net debt feasible.
- Fiscal room from budgetary overperformance can be used to:
- provide tax relief while maintaining small budget surpluses;
- foster efficiency by reducing high marginal effective tax rates on capital, saving, and labor.
Key findings and policy recommendations
- Findings:
- High growth accompanied by adjustments to commodity price gains and currency appreciation.
- Emerging downside risks from slowing U.S. demand.
- Strong fiscal position that enables potential elimination of general government net debt.
- Policy recommendations:
- Maintain monetary policy settings that guard against near-term downside risks.
- Use fiscal room to reduce high marginal effective tax rates on capital, saving, and labor to foster efficiency.
- Consider tax relief while preserving small budget surpluses given budgetary overperformance.