March 29, 2005 2005-024 Minister of Finance Ralph Goodale today welcomed the International Monetary Fund's (IMF's) yearly Staff Report and associated Public Information Notice of its Executive Board discussion on Canada. The report highlights Canada's macroeconomic performance since the mid-1990s, including the fastest growth rate and the strongest budget position in the Group of Seven industrialized nations. "This annual appraisal recognizes that our country's recent economic performance has been ¿enviable'¿reflecting the benefits of sound institutions, a strong monetary and fiscal policy framework, and structural reforms," said Minister Goodale. The Staff Report for the 2005 Article IV Consultation with Canada sees the near-term economic outlook for Canada as broadly favourable, with real gross domestic product (GDP) growth of 2.9 per cent in 2005 and 3.0 per cent in 2006. This is generally in line with the average of private sector economic forecasts used in the February 23, 2005, federal budget. Included in this year's IMF report is a review of federal budget forecasting that includes a comparison with other industrialized countries. The study provides a positive assessment of Canada's budgeting practices. It finds that Canada's fiscal forecasting process is governed by a strong institutional framework and is highly transparent compared to many other countries. The study points to further improvements that could be examined, such as providing greater information on the assumptions and methods used to derive fiscal projections. "I want to thank the IMF for undertaking this very useful study at our request," said Minister Goodale. "It will be an important tool to help us make sure that the Government of Canada continues to use the most up-to-date economic and fiscal forecasting methods, and to benchmark Canadian practices against the best in the world." The IMF study has been forwarded to Dr. Tim O'Neill, Chief Economist and Executive Vice-President of BMO Financial Group, who has been commissioned by the Government to assess the Department of Finance's economic and fiscal forecasting methodologies. His report is expected later this spring. Other comments and recommendations contained in the 2005 Staff Report include: To meet the challenges of population aging and increasingly globalized markets, the IMF report encourages further productivity-enhancing structural reforms, including lowering the tax burden. The report commends Canada's recent commitments to increasing international assistance, noting in particular the cancellation of official debt owed to Canada by several African countries. As required by Article IV of its Articles of Agreement, the IMF reviews economic developments and policies of each member country, usually on an annual basis. The IMF's report is released at the discretion of the country being reviewed. For several years, Canada has released the report in recognition of the importance of the IMF's surveillance activities, and as an expression of Canada's commitment to ensuring that these activities are transparent. The IMF's full report on Canada and the accompanying issue papers can be found on its Web site at www.imf.org. - 30 - For further information: David Gamble Public Affairs and Operations Division (613) 996-8080 Pat Breton Press Secretary Office of the Minister of Finance (613) 996-7861
