Canadian finance minister urges US to cut deficit

AP News
Posted: Jun 15, 2011 6:41 PM
Canadian finance minister urges US to cut deficit

Canadian Finance Minister Jim Flaherty said on Wednesday that the U.S. should come up with a clear plan to reduce its deficit and balance its budget quickly in order to ensure the health of the Canadian and global economy.

"The United States is a major recipient of Canadian exports. Any difficulties in the U.S. economy are felt in the Canadian economy directly," Flaherty said.

He added that the continued weakness in the U.S. housing market is also a concern.

The comments were made during a speech to the Canadian Association of New York and in a question-and-answer period with reporters.

U.S. Vice President Joe Biden is currently leading talks for a budget deficit deal that would help lawmakers raise the U.S. debt ceiling. Without an increase in the debt ceiling, the U.S. could default on its debt. Biden told reporters Tuesday that he hopes there will be a tentative agreement before Congress' July 4th recess.

"The health of Canada's economy _ and of the world's, for that matter _ depends greatly on the fiscal decisions being made here," Flaherty said.

Canada is currently grappling with labor strikes at the nation's post office and airline. Canada Post suspended operations Wednesday after 12 days of rotating strikes by its unionized workers. Meanwhile, Air Canada workers went on strike Tuesday after negotiations between the worker's union and the airline failed to reach an agreement on wage and pension issues.

Flaherty said both strikes are hurting the economy.

"Air Canada is a major carrier in Canada, not only of people, but cargo. So that has a direct economic effect," Flaherty said, adding that the minister of labor is taking steps to make sure that there is no interruption of service at Air Canada.

As for who Canada will support to be the next head of the International Monetary Fund, Flaherty said that a decision hasn't been made yet. He said that French Finance Minister Christine Lagarde and Mexico's central bank chief Agustin Carstens are "two excellent candidates" for the job that was vacated by Dominique Strauss-Kahn after he resigned last month following his arrest on sexual assault charges.

"We will move forward on that before too long," he added.