OTTAWA - CANADA'S budget on Tuesday plunged into the red for the first time in 11 years to pay for a hefty economic stimulus promised to G20 partners.
The announced 40-billion Canadian dollars (S$48.9 billion) stimulus amounts to a 1.9-percent boost in economic activity in 2009, and 1.4 per cent next year.
But it will result in a C$64-billion budget deficit over two years, the government said. And Canada is now not expected to see another surplus until 2014 - if the stimulus works.
'We have to do what we have to do to protect Canada from a synchronised global recession,' Finance Minister Jim Flaherty said of his budget, and 'to build capacity to come out of it stronger'.
Canada is the last of the Group of Seven (G7) industrialised nations to roll out a stimulus plan to help turnaround a global recession triggered by a collapse of the US subprime mortgage market last year.
While in a better position relative to its G7 peers, Canada as a major exporter has not escaped the downturn.
More than 100,000 jobs have been lost in the past two months and more cuts are likely before a turnaround takes root mid-year, said the central bank.
Canada's economy, forecast by the bank to decline by 1.2 per cent this year before rebounding by 3.8 per cent in 2010, 'may get worse, and we may have to do more,' Mr Flaherty commented.
Canada's last deficit was C$8.9 billion in 1996. -- AFP
