Prime Minister Justin Trudeau said his government will roll out a “significant” fiscal stimulus package Wednesday in a bid to shield Canada’s economy from tumbling into a recession.
In his second televised address from outside his residence in as many days, Trudeau said the plan will include economic support for individual Canadians and businesses affected by the coronavirus pandemic. He added that lawmakers could be recalled briefly to enact changes to unemployment benefits.
“We have the ability to invest right away to help Canadians but there are legislative measures that will need to be agreed to by parliament in order to move forward,” Trudeau said Tuesday in Ottawa.
The Bank of Nova Scotia recommended last week the federal government would need to produce at least a $20-billion (US$14.1 billion) stimulus package this year in order to stave off a recession, and things have deteriorated since. On Monday, Trudeau closed the border to all non-residents except Americans.
U.S. Treasury Secretary Steven Mnuchin is expected to seek a new round of coronavirus-related economic stimulus of US$850 billion or more from Congress. An equivalent package for Canada would be in the order of $100 billion.
Canada’s planned fiscal stimulus program will likely inject cash into businesses to keep employees on the payroll even if they aren’t working, as well as bolstering government benefits and unemployment programs, Trudeau said earlier Tuesday in a telephone interview with 680 News radio.
At his press conference, he also said to expect another announcement later this week regarding leniency in filing and paying income taxes. Tax files are usually due at the end of April, but Quebec announced Tuesday it would delay provincial deadlines and payments.
So far, the Canadian government has announced $1 billion in funding, along with $10 billion in new credit to backstop businesses. It also announced plans to purchase up to $50 billion in mortgages to free up banks to continue lending. But the country has yet to deliver a major stimulus plan that would soften the blow of a swift drop in demand.
Rate Cuts
Robust measures from Finance Minister Bill Morneau would be the latest step by officials trying to get ahead of the COVID-19 pandemic. The Bank of Canada has cut interest rates by a full percentage over the past two weeks. The country’s banking regulator also said it would loosen capital requirements to free up $300 billion of lending capacity.
Trudeau continues to govern from home after going into self isolation last Thursday, when his wife Sophie Gregoire Trudeau tested positive for the coronavirus following a trip abroad. He said he is “feeling fine” during the morning radio interview.
As of Tuesday morning, there were 424 confirmed cases of COVID-19 and four deaths, according to Health Canada. A fifth death — the first in Ontario — has since been confirmed by officials in Canada’s most-populous province, which has declared a state of emergency.
