SP gives Canada shining report
By BRUCE LITTLE
ECONOMICS REPORTER
UPDATED AT 4:27 PM EST Thursday, Mar. 18, 2004
Canada has been handed a glowing report card by a major bond rating agency, which praises the country's open economy, sound public finances and stable political system.
In a report that would have been almost unthinkable a decade ago, Standard & Poor's Corp. of New York said the country's strengthening financial profile, "impressive debt reduction," "successful inflation targeting," "strong public sector balance sheet," and "policy stability based upon wide political consensus [all] augur well for Canada's long-term growth prospects."
Lower government debt has put Canada "in a better position to meet the fiscal challenges of an aging population than many other . . . countries" that are part of the Organization for Economic Co-operation and Development, S&P analyst Joydeep Mukherji said in his assessment.
S&P rates Canada's bonds as a triple-A investment, its highest rating. The agency downgraded the rating to double-A-plus in 1992, when federal and provincial debt was soaring, but restored the triple-A rating in 2002.
The latest report says Canada's net general government debt is projected to fall below 30 per cent of gross domestic product next year, compared with 55 per cent in the United States and France and 36 per cent in Britain.
Mr. Mukherji, himself a Canadian who has worked abroad since 1996, praised Canada's success at integrating more immigrants, relative to population, than most developed countries "while maintaining better social cohesion than many European countries and the United States."
The consensus on economic policy is likely to endure "regardless of economic cycles and changes in political leadership," he said.
The S&P report raised only two critical points. It suggested that comparatively low salaries paid to senior officials in key federal economic ministries raises a "modest concern" about Ottawa's ability "to keep recruiting able people." And it said that Canada, like other rich countries, "maintains high levels of trade protection on clothing, textiles and agricultural products." |
