By Paul Vieira
OTTAWA--Canada's Liberal government, which deployed fiscal policy aggressively to mitigate the fallout from the pandemic, says it will now pivot to prudent spending plans with the economy well on the road to recovery.
The promise is contained in the government's ceremonial throne speech, which marks the return of Canada's parliament following a Sept. 20 national vote in which the Liberals won a third term although with another minority mandate. In a minority parliament, the Liberals will require help from another party to help pass legislation and stay in power.
The speech incorporated broad strokes of the government's near-term agenda, and largely reiterated promises made during the election campaign, such as affordable child care, increased supply of housing units, and capping carbon emissions from Canada's oil-and-gas sector.
The speech, read by Canada's governor general, or vice regal, noted that Canada went on a record spending spree to fight the negative fallout from Covid-19. All told, Canada's fiscal support to stem the worst of the pandemic exceeded 23% of its gross domestic products, one of the biggest responses among developed-world countries to the public-health and economic crisis. In April, the government said it planned to spend roughly 100 billion Canadian dollars ($78 billion), over three years to help fuel growth and repair the social-safety net in the aftermath of the pandemic.
"Now, with one of the most successful vaccination campaigns in the world, and employment back to prepandemic levels, the government is moving to more targeted support, while prudently managing spending," the speech said.
Canada Finance Minister Chrystia Freeland is expected to deliver a fall economic statement in the coming weeks. In the budget plan presented in April, Canada said it anticipated posting a deficit for the fiscal year ended March 31 of about C$350 million, or 16% of GDP, both records. At the time, it projected a budget deficit for the current fiscal year of about C$150 billion.
Canada, along with the U.K., have been at the forefront of withdrawing Covid-19-related stimulus measures. Late last month, Ms. Freeland said the government would wind down nearly all of the emergency-income benefits for households and businesses that were provided during the worst of the pandemic.
Also, the Bank of Canada ended its large-scale asset purchases, or quantitative easing, and signaled it might increase interest rates sooner than previously anticipated.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
11-23-21 1347ET
