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Canada in good books of IMF

Not every country appreciates the International Monetary Fund’s tutelage. Canada, however, is the teacher’s pet. Prime Minister Justin Trudeau and Finance Minister Bill Morneau invoked the IMF’s new thinking on deficits to justify their decision to borrow heavily to finance tax cuts and infrastructure spending. The fund’s managing director, Christine Lagarde, took note. She now cites Canada as a rare example of a country trying to do something positive for the global economy. The IMF economists assigned to keep an eye on Canada completed a fact-finding mission recently. They eventually will write a lengthy report on the state of the economy, complete with recommendations. But they have released a preliminary report . The review was mostly positive. The authors said Trudeau’s fiscal stimulus would add 0.5% to economic growth this year and next, allowing the economy to reach its non-inflationary level of potential output faster than if former prime minister Stephen Harper’s obsession with a balanced budget had remained Ottawa’s priority. “The federal government’s pro-growth 2016 budget is appropriate,” the report says.

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