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Statement by the Minister of Finance about
the Canadian Dollar
January 22, 2002
The following is a transcript of a statement made yesterday by the Minister
of Finance about the value of the Canadian dollar compared to the U.S. currency:
"No one is happy with what has been happening with the Canadian
dollar, certainly not the Government of Canada. The fact that other
currencies are suffering as well does not make it any more palatable.
In Canada's case, I really wonder whether currency markets are fully
taking into account today's reality. We have a very diversified economy.
Commodities make up 30% of our exports today compared to 60% twenty years
ago. We are the only G7 country with a balanced budget this year. That is
our 5th in a row. Our debt to GDP ratio has fallen by 20 percentage points
since 1995, the largest drop of any major industrialized nation and it's
going to continue to drop next year. We have paid back over 35 billion
dollars of debt, and over 17 billion as recently as last year. We now have a
large current account surplus compared to the United States, which is in
huge deficit. And furthermore, our foreign debt has dropped from 45% to 20%
as a share of GDP, that is its lowest level in 50 years.
Our average corporate tax rate will soon be lower than the US and our
average tax on capital gains is lower than in the US, as of today. [We have
had] 10 years of very low inflation, one of the best inflation records in
the world. That is a full percentage point below the US. With respect to the
economy, in the midst of global uncertainty, we should not forget that in
2001 we had better performance than the United States and most forecasters
are predicting Canada's economy will perform as well if not better than the
US economy this year.
In summary, our commitment is to continue with our policy of fiscal
discipline and improving competitiveness for Canada. Everybody knows that
exchange rates can be volatile, however they do, over time, reflect economic
conditions, and we believe that the factors that I have just set out will be
reflected positively in the Canadian dollar."
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