

Currently released so far... 13368 / 251,287
Articles
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
2011/05/18
2011/05/19
2011/05/20
2011/05/21
2011/05/22
2011/05/23
2011/05/24
2011/05/25
2011/05/26
2011/05/27
2011/05/28
2011/05/29
2011/05/30
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Consulate Karachi
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
Consulate Thessaloniki
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
ASEC
AEMR
AMGT
AR
APECO
AU
AORC
AJ
AF
AFIN
AS
AM
AFFAIRS
AA
ADM
ALOW
ACOA
ATRN
AID
AND
APER
ADANA
APEC
ADPM
ADCO
ABLD
AADP
AG
ARF
AMED
AY
AORG
ASEAN
ABUD
AROC
AE
AO
AL
APCS
AGAO
AINF
AODE
ACABQ
AX
AMEX
AZ
ASUP
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AFSI
AFSN
AC
ASIG
ASEX
AER
AVERY
AGRICULTURE
ASCH
AFU
AMG
ATPDEA
ASECKFRDCVISKIRFPHUMSMIGEG
AORL
AN
AIT
ANET
AGMT
ACS
AGR
AMCHAMS
AECL
AUC
AFGHANISTAN
ACAO
BR
BB
BG
BEXP
BY
BA
BRUSSELS
BU
BD
BK
BL
BH
BM
BTIO
BP
BO
BE
BILAT
BC
BX
BIDEN
BF
BBSR
BT
BMGT
BWC
BN
BTIU
CPAS
CA
CASC
CS
CBW
CIDA
CO
CODEL
CI
CROS
CU
CH
CWC
CMGT
CVIS
CDG
CD
CV
CG
CF
CHIEF
CJAN
CBSA
CE
CY
CM
CONS
CW
CN
CDC
CT
CONDOLEEZZA
CICTE
CYPRUS
COUNTRY
CBE
CIVS
COPUOS
CARSON
CTR
COUNTER
COM
CR
CFED
CKGR
CHR
CVR
CLINTON
COUNTERTERRORISM
CITEL
CLEARANCE
COE
CARICOM
CB
CSW
CIC
CITT
CAFTA
CACM
CDB
CJUS
CTM
CAN
CONSULAR
CLMT
CBC
CIA
CNARC
CIS
CEUDA
CAC
CL
CACS
CAPC
ECON
ETTC
EFIS
ETRD
EC
EMIN
EAGR
EAID
EU
EFIN
EUN
ECIN
EG
EWWT
EINV
ENRG
ELAB
EPET
EN
EAIR
EUMEM
ECPS
ELTN
EIND
EZ
EI
ER
ET
EINT
ECONOMIC
ENIV
EXIM
ES
ECONOMY
ERNG
ELECTIONS
ENERG
EK
EPA
ENGR
ETRC
ENVI
EXTERNAL
ELN
EAIDS
ECA
EFTA
EINVEFIN
EUREM
ETRDEINVECINPGOVCS
EFINECONCS
ECOSOC
ETC
ENVR
EAP
EINN
EXBS
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EREL
EINVETC
ECONCS
ETRA
ESA
EAIG
EUR
EUC
ERD
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ESENV
ENNP
ECINECONCS
ETRO
ETRDECONWTOCS
ECUN
GM
GG
GERARD
GT
GA
GR
GTIP
GLOBAL
GV
GH
GL
GOV
GOI
GF
GTMO
GANGS
GCC
GAERC
GE
GZ
GAZA
GY
GUILLERMO
GASPAR
IZ
IN
IAEA
IS
IMO
ILO
IR
IC
IT
ITU
IV
IMF
IBRD
INDO
IWC
IRAQI
ISRAELI
ITALY
ITPGOV
ITALIAN
ICAO
ITRA
IPR
INMARSAT
ID
ICRC
INTERNAL
IIP
IRS
ICTY
IQ
IO
ICJ
ILC
IEFIN
IA
INTERPOL
IEA
INR
INRB
IAHRC
ISRAEL
IZPREL
IRAJ
IF
ITPHUM
IL
IACI
IDA
ISLAMISTS
IGAD
ITF
INRA
INRO
IBET
INTELSAT
IDP
ICTR
IRC
KNNP
KFLO
KDEM
KOMC
KSUM
KIPR
KFLU
KPAO
KE
KCRM
KJUS
KAWC
KZ
KSCA
KDRG
KCOR
KGHG
KPAL
KTIP
KMCA
KCRS
KPKO
KOLY
KRVC
KVPR
KG
KWBG
KMDR
KTER
KSPR
KV
KTFN
KWMN
KFRD
KSTH
KS
KN
KISL
KGIC
KSEP
KFIN
KTEX
KTIA
KUNR
KCMR
KMOC
KCIP
KTDB
KBIO
KU
KSTC
KICC
KIRC
KSEO
KSAF
KR
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KIRF
KOCI
KMPI
KCRCM
KNUC
KIDE
KPAONZ
KHLS
KPRP
KHDP
KNUP
KHIV
KCSY
KTRD
KNAR
KWAC
KJUST
KTBT
KBCT
KNPP
KO
KBTS
KSCI
KACT
KFSC
KENV
KAWK
KHSA
KPRV
KVIR
KCFE
KX
KVRP
KCOM
KAID
KPWR
KTLA
KMFO
KNNPMNUC
KNDP
KMRS
KERG
KPOA
KRCM
KCFC
KNEI
KCHG
KPLS
KREL
KFTFN
KTFM
KLIG
KDEMAF
KRAD
KBTR
KGIT
KGCC
KICA
KHUM
KSEC
KPIN
KESS
KDEV
KPIR
KWWMN
KOM
KWNM
KRFD
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KRGY
KREC
KIFR
KSAC
KWMNCS
KPAK
KOMS
KFPC
KRIM
KDDG
KCGC
KPAI
KID
KMIG
KNSD
KWMM
MARR
MX
MASS
MOPS
MNUC
MCAP
MTCRE
ML
MR
MRCRE
MTRE
MASC
MY
MK
MAS
MO
MTCR
MIL
MAPP
MG
MD
MAR
MZ
MU
MP
MA
MOPPS
MTS
MLS
MILI
MEPN
MEPI
MEETINGS
MERCOSUR
MW
MT
MCC
MIK
MAPS
MV
MILITARY
MARAD
MDC
MEPP
MASSMNUC
MUCN
MEDIA
MI
MQADHAFI
MPOS
MPS
MC
NZ
NATO
NI
NO
NG
NL
NU
NPT
NS
NA
NATIONAL
NSF
NDP
NR
NSSP
NP
NIPP
NGO
NAS
NE
NZUS
NH
NSG
NAFTA
NC
NEW
NRR
NT
NASA
NAR
NK
NOVO
NATOPREL
NSC
NV
NPA
NSFO
NW
NORAD
NPG
OTRA
OECD
OVIP
OREP
OPRC
ODC
OIIP
OPDC
OAS
OSCE
OPIC
OMS
OEXC
OPAD
ODIP
OPCW
OIE
OFDP
OFFICIALS
OHUM
OSCI
OTR
OMIG
OSAC
OBSP
OFDA
OVP
ON
OCII
OES
OCS
OIC
PGOV
PREL
PARM
PINR
PHUM
PM
PREF
PTER
PK
PINS
PBIO
PHSA
PE
PBTS
PL
POL
PAK
POV
POLITICS
POLICY
PPA
PCI
PAS
PALESTINIAN
PROP
PTE
PA
PAIGH
PO
PROG
PJUS
POLITICAL
PMIL
PGOF
PDOV
PSI
PG
PRAM
PREO
PARMS
PAO
PTERE
PRGOV
PORG
PP
PS
PKFK
PSOE
PEPR
PINT
PMAR
PRELP
PREFA
PNG
PFOR
PUNE
PGOVLO
PHUMBA
POLINT
PNAT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PY
PLN
PHUH
PEDRO
PF
PHUS
PTBS
PU
PARTIES
PCUL
PGGV
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PGIV
PHUMPREL
POGOV
PEL
PINL
PBT
PINF
PRL
PSEPC
POSTS
PAHO
PHUMPGOV
PGOC
PNR
PROV
RS
RP
RU
RW
RFE
RCMP
RIGHTSPOLMIL
ROBERT
RICE
RM
REGION
RO
ROOD
RSP
RF
RELATIONS
RIGHTS
RUPREL
REMON
REACTION
REPORT
RSO
SZ
SENV
SOCI
SNAR
SY
SO
SP
SU
SI
SMIG
SYR
SA
SCUL
SG
SW
SR
SYRIA
SPECIALIST
SEN
SC
SF
SL
SAARC
SNARIZ
SARS
STEINBERG
SCRS
SWE
SN
SAN
ST
SIPDIS
SSA
SPCVIS
SOFA
SENVKGHG
SANC
SHI
SEVN
SHUM
SK
SH
SNARCS
SPCE
SNARN
SIPRS
TRGY
TBIO
TSPA
TU
TPHY
TI
TX
TH
TIP
TSPL
TNGD
TP
TW
TZ
TF
TN
TC
TL
TV
TS
TT
TK
TD
TERRORISM
TO
TRSY
TURKEY
TINT
TFIN
TAGS
TR
TBID
THPY
UNSC
UK
UNGA
UN
US
USTR
UZ
USEU
UV
UG
UP
UNAUS
UNMIK
UY
USPS
UNHRC
USUN
UNESCO
UNCHR
UNHCR
USNC
UNEP
USOAS
USAID
UE
UNVIE
UAE
UNO
UNDP
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
UNPUOS
UNDC
UNICEF
UNCHC
UNCSD
UNFCYP
UNIDROIT
UNCND
Browse by classification
Community resources
courage is contagious
Viewing cable 08OTTAWA1502, Harper Government Gives Snapshot of Canada's Economic
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08OTTAWA1502.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
08OTTAWA1502 | 2008-12-01 21:57 | 2011-04-28 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Ottawa |
VZCZCXRO3376
PP RUEHGA RUEHHA RUEHMT RUEHQU RUEHVC
DE RUEHOT #1502/01 3362157
ZNR UUUUU ZZH
P 012157Z DEC 08
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC PRIORITY 8786
INFO RHEHAAA/WHITE HOUSE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHME/AMEMBASSY MEXICO 1898
RUEHRL/AMEMBASSY BERLIN 1140
RUEHFR/AMEMBASSY PARIS 1051
RUEHKO/AMEMBASSY TOKYO 3394
RUEHRO/AMEMBASSY ROME 1393
RUEHLO/AMEMBASSY LONDON 0991
RUEHBS/USEU BRUSSELS 0657
UNCLAS SECTION 01 OF 03 OTTAWA 001502
WHITE HOUSE FOR COUNCIL OF ECONOMIC ADVISORS
STATE FOR WHA, EEB
STATE PASS USTR
COMMERCE FOR ITA/MAC
TREASURY FOR IA/NEPHEW
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN EINV EIND CA
SUBJECT: Harper Government Gives Snapshot of Canada's Economic
Health
Refs: (A) Ottawa 1495 (B) Ottawa 1395 (C) Ottawa 1372
Sensitive But Unclassified. Protect accordingly. Not for internet
distribution.
¶1. (SBU) Summary: The Conservative government's November 27
Economic and Fiscal Statement stated that Canada is well positioned
to weather the uncertainty and risks arising from the global
financial crisis. Finance Minister Flaherty said the health of
Canadian banks and the financial positions of households,
corporations, and government would mitigate the worst impacts of the
international downturn. The government expected the Canadian
economy to grow 0.6 percent in 2008 and 0.3 percent in 2009, and it
planned to run balanced budgets through FY2012-13 - but would not
rule out future deficits. Flaherty indicated that the government
would likely wait until the New Year before unveiling a possible
fiscal stimulus package as recommended at the G20 Summit in
Washington last November. Senior Bank of Canada officials privately
stated that monetary policy remains effective in Canada. As a
result, the Harper government may look to the Bank to stimulate the
economy - instead of using fiscal policy - in the coming months.
End summary.
Good Fiscal Position May Make Economic Challenges Less Daunting
------------------------
¶2. (U) In a November 27 message that triggered a contentious
political row over political party funding (ref a), the Conservative
government's Economic and Fiscal Statement said Canada is well
positioned to weather the uncertainty and risks arising from the
global financial crisis. (The Economic and Fiscal Statement is
typically released in November and provides an update of Canada's
economic and fiscal situation ahead of the federal budget, which is
typically due in late February or early March. The government has
since said the budget would be tabled by January 27, the day after
the House is scheduled to return from its year-end recess.)
Delivering the Statement in the House of Commons, Finance Minister
Jim Flaherty said that the sound footing of Canadian financial
institutions (refs b, c) and the relatively strong financial
positions of households, corporations, and government should
mitigate the negative impacts of the international economic
downturn.
¶3. (SBU) Flaherty stated that private sector economic forecasters
expect a "technical recession" in Canada with negative growth in the
fourth quarter of 2008 and the first quarter of 2009, despite
full-year real GDP growth of 0.6 per cent in 2008 and anticipated
growth of 0.3 per cent for 2009. (For its part, the Bank of Canada
sees 0.6 percent GDP growth in both calendar 2008 and 2009 due to
tighter credit flows, falling external demand - primarily from the
United States - and a sharp fall in commodity prices.)
¶4. (SBU) The government's Statement said Canada enjoyed a strong
fiscal position when the global financial crisis started, with a
budget surplus of C$9.6 billion in FY2007-08 - the best of any G7
country. (Note: Canada's fiscal year runs April 1 to March 31.)
The Statement was clear, however, that the surplus would shrink next
QThe Statement was clear, however, that the surplus would shrink next
year. Canada had only a C$804 million budget surplus from April to
September 2008, compared to C$6.63 billion for the same period in
¶2007. While the government said it expects to run balanced budgets
and even small surpluses through FY 2012-13, global economic
uncertainty made it impossible to rule out future deficits.
Flaherty, however, promised no "structural deficits." (Federal
deficits are a highly sensitive political issue in Canada; in the
early 1990s Canada faced an environment of rising debt and deficits
and increasing uncertainty about its ability to continue to borrow
money from domestic and international institutional investors, and
the cost of this source of funds. Subsequently, from roughly 1993
to 1998, the Liberal government of Prime Minister Jean Chretien,
with Finance Minister Paul Martin leading the way, erased the
OTTAWA 00001502 002 OF 003
deficit by slashing federal spending. Since that time all Canadian
political parties have subscribed to the shibboleth of "no budget
deficits.") For their part, opposition political parties said the
government's numbers were not credible and that the government was
probably already in deficit.
¶5. (SBU) The government's Statement said the sharp decline in world
commodity prices in 2008 - primarily for energy and forestry
products - will reduce the level of Canada's nominal GDP in 2009 and
2010 compared to earlier estimates. (The government uses nominal
GDP as the broadest indicator of Canada's tax base. The Bank of
Canada has privately noted that as Canada's nominal GDP growth
slows, government spending may come under further pressure.) The
Statement also said the sharp appreciation of the Canadian dollar in
2007 and the 2008 U.S. economic slowdown hurt export-intensive
sectors, particularly manufacturers and forestry-related products.
The government noted that some 75 percent of Canadian manufacturing
production is located in central Canada (Ontario and Quebec) and
that more than 80 percent of central Canada's manufacturing exports
are shipped to the United States.
Canada's Economic Strengths
---------------------------
¶6. (U) Despite the challenges noted above, Flaherty - and the
government's Statement in more detail - stated that Canada may be
well positioned to weather the global economic storm. In
particular, the Statement noted that:
--The Canadian housing sector is sound, with subprime mortgages
accounting for less than 5 percent of new mortgages. Canadian
lenders must also insure against default any mortgages with less
than a 25 percent down payment;
--Canada's banks and other financial institutions are liquid and
well capitalized, and have lower leverage ratios than their
international peers; and
--Core Consumer Price Index (CPI) inflation has remained low, stable
and predictable - and is within the Bank of Canada's targets.
Strengths of the Canadian Financial System
------------------------------------------
¶7. (U) The government's Statement also stressed the underlying
strengths of the Canadian financial system:
--Canadian capital requirements for financial institutions are well
above minimum international standards.
--At the start of the financial crisis, Canadian banks' capital
buffers on risk-adjusted assets were 9.5 percent, while many global
banks had capital ratios of only 6 or 7 percent.
--Canadian banks are also less leveraged than many of their
international financial institution counterparts. Canadian banks'
overall assets amounted to less than 20 times their capital, while
major U.S. banks had 30 times more assets than capital and some
European banks were leveraged up to 50 times.
--Large Canadian investment houses are owned by banks, and are
regulated on a consolidated basis by the Office of the
Superintendent of Financial Institutions.
No Stimulus Announced Yet - Other Measures in Meantime are Modest
----------------------------
¶8. (SBU) Flaherty also announced plans focused on the federal
Q8. (SBU) Flaherty also announced plans focused on the federal
government's internal economy such as a limiting wage increases to
public servants, limiting federal workers' right to strike (although
OTTAWA 00001502 003 OF 003
in the political firestorm of the weekend, they have backtracked
from that stance), cutting federal spending on travel, hospitality,
conferences, exchanges and political services, and most
controversially, eliminating federal subsidies to support political
parties that receive more than 2 percent of the national vote (See
ref a; again something the government appeared to retreat from in
the wake of the political reaction).
¶9. (U) Minister Flaherty made it clear the government will likely
wait until the actual budget (which, according to statements on the
weekend from the Finance Minister will come, atypically, in late
January 2009) before unveiling a possible fiscal stimulus package as
recommended at the G20 Summit in Washington on November 14-15.
Flaherty - and the government's Statement - said the Harper
government's tax cuts since 2006 were in effect a pre-emptive
stimulus package, with Canadian taxpayers paying C$31 billion less
in taxes (almost 2 percent of GDP) in FY2009-10. The government's
Statement also noted the importance of infrastructure spending in
providing fiscal stimulus and said budget programs supporting
provincial, territorial and municipal infrastructure projects are
scheduled for a large increase to C$6 billion in 2009. The
government also stated that it is looking to speed up the roll-out
of anticipated infrastructure projects.
¶10. (SBU) Comment: The IMF has recommended that countries spend an
average of 2 percent of GDP on fiscal stimulus actions. Senior Bank
of Canada officials privately tell us that each country faces
differing circumstances, and that monetary policy is still effective
in Canada. As a result, the Canadian government may look to the
Bank to use monetary policy in place of fiscal actions to stimulate
the economy in the coming months. The Bank expects to make further
stimulus rate cuts - on top of the 75 basis points in October
2008(and the 225 basis points since December 2007). Currently the
Bank of Canada "key lending rate" to banks rate is 2.25 percent. The
next Bank announcement on interest rates is scheduled for Tuesday,
December 9. Bank officials also state that cutting consumption
taxes - as, in part, the Harper government has done - is an
inefficient fiscal stimulus that does little to change spending
behavior. The officials say that more efficient spending - such as
on infrastructure projects or direct transfers to individuals- has a
greater domestic multiplier effect than cutting taxes.
¶11. (SBU) Comment: Given the structure of the Canadian economy (see
para 5) Embassy would not be surprised if the government's
relatively rosy projections do not face at least some downward
revision in coming months. End comment.
Wilkins