Source: Andrii Vodolazhskyi, Shutterstock
- Finance Minister Chrystia Freeland had last year indicated that the government will do its best to support Canadians.
- Ever since the outbreak of the pandemic, more than 3 million people lost their jobs.
- For economic recovery, the government might focus on making any other stimulus sustainable and might limit new debt.
The federal government will reveal its annual spending plans today, April 19, amid a worsening COVID-19 pandemic crisis to pave the way for economic recovery. The 2021 budget will come after a gap of two years and the government is also expected to focus on pandemic support.
Finance Minister Chrystia Freeland had last year indicated that the government will do its best to support Canadians. She also promised a stimulus package to 'jump-start' an economic recovery.
As Canada faces a more difficult wave of the coronavirus and provinces brace themselves for lockdown and strict public health measures. Let's take a look at what the government might offer to its citizens and businesses:
'Focusing On Pandemic Recovery'
Ever since the outbreak of the pandemic, more than 3 million people lost their jobs. Despite the high unemployment levels, the economy expanded for nine straight months and the budget might aim to help unemployed people in getting their jobs back. The government is expected to fund skills and training programs to increase employability.
©Kalkine Group 2021
In this federal budget, the government will likely continue providing fiscal supports as part of the pandemic recovery. Wage and rent subsidy programs that are set to expire in June might be extended as the country has entered into the third wave of the pandemic. These programs might find space in the spending document and will cost around C$ 12 billion if extended till September.
Since Ms Freeland had promised a recovery stimulus, the government might come up with a stimulus package of up to C$ 100 billion to address the issues faced by businesses and individuals due to the ongoing health crisis.
'Economic Recovery Should Be A Top Priority
For economic recovery, the government might focus on making any other stimulus sustainable and might limit new debt. It might reallocate spending from other areas to focus on programs that can improve the economic conditions and generate revenue.
Amidst the third wave of the pandemic, the government will likely concentrate on accelerating vaccine rollout to help the rebuild the economy and return to its full capacity by the time government presents its next budget.
Reports suggest that the finance minister might focus on a new fiscal anchor to ensure that the investors and rating agencies increase their confidence in the country. Due to the current low-interest rates, a higher debt could be managed by the government.
A dedicated focus on the Strategic Innovation Fund (SIF) might help Canada to lure foreign investors and boost its economy. According to the Government of Canada, under SIF C$ 46.6 billion total investments have been leveraged and it has created 73,000 jobs so far.
The SIF provides loans and gives grants to promote foreign investment. It also gives leverage to domestic companies to increase their potential.
With a focus on green transformation, the SIF might get attention in the budget and will likely prove beneficial for the economy in future.