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Archived - A Balanced Approach to Economic and Financial Management

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February 1998


"What I am about to say is something no Canadian government has been able to say for almost 50 years. We will balance the budget next year. We will balance the budget the year after that. And we will balance the budget this year. This achievement is the accomplishment of Canadians, not of government."

Finance Minister Paul Martin
1998 budget speech

Our Plan is Working

Reducing the Debt Burden

The best way to measure a country's debt burden is in relation to the size of its economy or gross domestic product (GDP). The debt-to-GDP ratio measures what is owed in relation to what is produced, and thereby indicates an economy's capacity to manage its debt. The lower the ratio, the more manageable the debt.

As Canada prepares for the next century, a key challenge is to keep the debt-to-GDP ratio on a permanent downward path. To that end, the government will follow a two-track strategy:

The Debt Repayment Plan

The Debt Repayment Plan is based on three key elements:

With this plan, the debt-to-GDP ratio is projected to fall to about 63 per cent in 1999-2000.

Financial Surplus

For international comparisons, the most appropriate measure of the budget balance is financial requirements/surplus -- a measure that essentially represents the amount of new money the government has to borrow on credit markets.

On that basis, Canada is in the best fiscal health of the G-7 group of nations.

A Balanced Approach

A successful debt reduction strategy requires that fiscal action be complemented by investments that are essential to long-term job creation by supporting strong economic growth.

The 1998 budget builds on actions taken in previous budgets through targeted investments and tax measures to build a strong economy and a secure society. Eighty per cent of the new spending initiatives in this budget reflect two of the highest priorities of Canadians.

Maintaining Spending Control

Even with the new spending initiatives proposed in this budget, federal program spending will continue to decline relative to the size of the economy (GDP).

Keeping Inflation Low

The government is also committed to ensure that Canada remains a low inflation country.

How can I get more information?

For more information, call the Department of Finance, General Enquiries, at (613) 992-1573.

You can obtain copies of this brochure or copies of the budget papers from:

Distribution Centre
Department of Finance
300 Laurier Ave. West
Ottawa, Ontario
K1A 0G5
Tel.: (613) 995-2855
Fax: (613) 996-0518

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