Canada's Debt Plan Praised as Model by IMF May Be 'Overrated'

(Bloomberg) — International Monetary Fund Managing Director Christine Lagarde has lauded Canada as a model for deficit spending to boost flagging economic growth. The problem is its lower-tier governments — from the commercial capital, Toronto, to far northern Nunavut — don’t have much room to contribute to the stimulus.Looking beneath the national level, the debt burden for city and provincial governments has climbed to a record high of 66 percent of GDP. Among other expenditures, provinces are on the hook for running the public health care system, a big-ticket cost that’s expected to balloon as the baby boom generation starts to retire.That’s a hurdle for Prime Minister Justin Trudeau’s plan to boost infrastructure spending because traditionally those lower levels of government chip in a third or half of the money to build new projects.”Canada’s ballyhooed fiscal space may be a little overrated,” Bank of Montreal chief economist Doug Porter wrote  …
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