Economy to see greater benefits of a low loonie over time, Morneau says as he courts U.S., Europe investors

OTTAWA – Bill Morneau has spent a lot of his post-budget time criss-crossing the country to sell the Liberal’s deficit-heavy spending intends to Canadians.

Now, the finance minister is taking that same message to the world’s largest financial centres – beginning in New York, and followed by stops in Paris and London.

For Canadians, his message is really a familiar one in the October election campaign: “There has never been a much better time for you to invest in Canada.”

But to achieve that, Morneau will need to pile on around $120 billion worth of debt within the government’s term in office, and likely beyond – the biggest deficit since 2009, when the then ruling Conservatives were battling a global recession.

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He also offers to convince global investors to assist support that spending by purchasing Canadian bonds along with other financial instruments.

Given that Canada’s debt-to-GDP ratio is comparatively low in contrast to other major economies, the minister’s pitch to the investment community – because it ended up being to voters – is that this country “has both the capacity and the willingness to act now.”

Morneau took that message to New York on Wednesday, saying the brand new government is dedicated to growing the Canadian economy now as well as for future generations.  

“For investors, they would like to see an economy that’s going to grow at a healthy pace over the long term, and that’s precisely what we’re setting out to do,” he told Bloomberg Television, following a speech to the Canadian Association of recent York.

“What we’ve said we will do is be prudent on the way. . . . What we should do is making investments, using fiscal measures in order to really growth the economy,” Morneau said.

Financial markets have been digesting it very, very well

“So, we are getting Canadians aboard, we are getting international observers on board. And I’m certain that investors – investors in Canadian bonds – are going to be supportive, because we’re going to boost the long-term trajectory of our country.”

In his New York speech, Morneau acknowledged the economy is still waiting to fully benefit from the weakness within the Canadian currency.

“Positive effects of the lower dollar might take longer to materialize, especially as our manufacturing sector adjusts following a longer time in which the dollar was strong.”

However, the minister said the Liberals – headed by Prime Minister Justin Trudeau – weren’t considering easing rules on foreign investment levels in sectors such as in energy and telecommunications.

“We think that currently there’s an approach which makes sense and we’ll keep having a propensity towards inviting people to spend which will make a positive change for Canadians,” he told reporters in New York.

On Thursday, Morneau will be in Paris to satisfy with business leaders and attend a G20 seminar around the International Financial Architecture. The following day, he will be the keynote speaker in an event at Canada House working in london.

“He’s clearly doing the rounds, presenting the budget, explaining what they are doing your budget, why there’s a deficit and how big could it be,” said Charles St-Arnaud, an economist at Nomura Global Research working in london.

So far, “financial markets have been digesting it very, perfectly,” said St-Arnaud, who previously worked in Canada’s Finance Department. “The Canadian economy is not in great shape, however it could be much worse.”

gisfeld@nationalpost.com

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