Economic Growth Policies Are Reaffirmed; Protectionism Assailed. (A Matter of Trust)
Commitment to the policies that now make Canada a growth leader during a period of economic slowdown are reaffirmed. Four elements are reduced debt and taxes, low inflation, and investment in education, research, innovation, and health. Protectionism that could thwart improved living conditions everywhere are assailed, and a stronger rule of international finance law is called for. Speech to the annual International Monetary conference, 2002, Montreal, Quebec, June 3, 2002.
As the newly appointed minister of finance, addressing this conference is extremely important, both for myself and the government. Clearly, a great deal has happened in the last 24 hours. Indeed, I have only been in my position less than a day.
But let me assure you, in no uncertain terms, that although individuals might change within government, our priorities and objectives have not and will not change. That means balanced budgets, reduced debt, low and stable inflation, tax cuts and key investments, which have been the foundation for Canada's success in recent years will remain so in the years ahead.
I know that the prime minister and the governor of the Bank of Canada have been looking forward to speaking to you. Let me welcome you to Canada and to Montreal -- the world's second largest francophone city.
You represent the world's leading banks and financial institutions, spanning some 26 countries. Your reach is truly global. This conference has played, and will continue to play, an important role in addressing some of the most pressing economic and monetary questions of the day. No doubt your meetings here in Montreal will be no exception.
Clearly, this has been a very trying year for the world. We have had to deal with the shock and aftermath of the terrible events of September 11 and the enormous challenge of a synchronized global economic slowdown.
In the face of these developments, banks and financial institutions around the world stepped up to the plate and played a critical role on several fronts. You provided much needed liquidity to markets and you have worked hand in glove with governments in the battle to end the financing of terrorism in the world.
All of this being said, you couldn't have chosen a better time to hold your conference in our country. We've come a long way since 1995, when The Wall Street Journal made us an honorary member of the Third World. At that time we faced some serious fiscal and economic problems and we had lost our triple-A credit rating. Today, our nation's finances are among the healthiest in the G-7, our economy is among the fastest growing, and our triple-A rating has been restored.
Now, this turnaround in our fiscal and economic performance did not just happen. It is the result of a systematic plan, which the Government of Canada has followed for several years. And, make no mistake, we will not veer from it in the future.
The first component of that plan was not only to get rid of deficits, but also to pay down debt. We have recorded five consecutive surplus budgets, including last year's. We will likely be the only G-7 country to do so as well this year and next. These surpluses have allowed us to reduce our national debt by more than $36 billion.
As a result, our debt-to-GDP ratio has fallen from 71% to 50% and will continue to drop in the foreseeable future. Equally impressive, we believe, is that our market debt, as a percentage of GDP, has decreased to 40% and it too will continue to fall.
There was a time when Canada's total net debt, as a share of GDP, was second only to Italy's among G-7 countries. Today, only the United States and the United Kingdom rank better than Canada.
Canada's current account moved into surplus in late 1999 and has remained so, despite the U.S. economic slowdown. As a result, our level of foreign indebtedness, as a share of GDP, has shrunk dramatically from 45% in the mid-1990s to under 20% in 2001. …