Justin Trudeau announced CN$1.1 billion (US$800 million) in new financial measures to help mitigate the effects of the widening coronavirus outbreak in Canada, adding he’s prepared to use federal financing agencies to stimulate the economy further if needed.
“To support businesses should the economy experience tightening credit conditions, the Government will act swiftly to stimulate the economy by strengthening investment in federal lending agencies,” Trudeau’s office said.— Office of Prime Minister of Canada Justin Trudeau
The prime minister said Wednesday the immediate plan includes providing faster unemployment insurance benefits to people who self-isolate, more funding for coronavirus research and financial assistance to provinces for medical supplies. If credit conditions tighten, the Government will use the Business Development Bank of Canada and Export Development Canada to help provide funding to businesses.
“I want all premiers and all Canadians to know, our Government is here for you. We will make sure you have everything you need,” Trudeau told reporters in Ottawa, adding the Government has the fiscal capacity to spend more if the situation deteriorates.
It’s the first major move to counter the crisis for Trudeau and suggests there are mounting concerns the fallout is impacting the Canadian economy. But the new spending contrasts with more dramatic measures from central banks and governments around the world, with the Bank of Canada last week slashing interest rates by half a percentage point to restore confidence.
European Central Bank President Christine Lagarde told European Union leaders on Tuesday there is a risk of a major economic shock unless leaders act urgently. The Bank of England made an emergency rate cut Wednesday, in co-ordination with UK Finance Minister Rishi Sunak’s pledge of a 30-billion-pound US($39 billion) stimulus package, as the Government seeks to prepare the British economy to fight the potentially devastating impact of coronavirus.
In Italy, Prime Minister Giuseppe Conte’s Government is ready to spend as much as 25 billion euros (US$28.3 billion) on stimulus measures to shield the economy from Europe’s worst outbreak of the coronavirus. President Donald Trump, meanwhile, is putting together the US Government’s response after initially taking a business-as-usual approach.
While short on funding, the Canadian measures do reveal a blueprint for how the Government is planning to help businesses if things worsen. The Business Development Bank of Canada and Export Development Canada provided CN$11 billion of additional credit during the 2008-2009 recession, according to a statement.
“To support businesses should the economy experience tightening credit conditions, the Government will act swiftly to stimulate the economy by strengthening investment in federal lending agencies,” Trudeau’s office said.
Medical authorities are currently treating more than 90 cases across the country, and one person has died, according to Health Canada. That’s a relatively low number for a country of 37 million people.
Trudeau was also asked about any measures he’s taking himself after attending a major mining conference last week in Toronto, at which another has since tested positive for COVID-19. The prime minister said he hasn’t yet been tested but is following the advice of health professionals.