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Economics

IMF Says Canada Should Resist Pressure to Spend Revenue Windfall

  • Trudeau government pulling in billions more than expected
  • Fund warns against undercutting central bank tightening
Chrystia Freeland speaks alongside Justin Trudeau in Hamilton on April 8.
Chrystia Freeland speaks alongside Justin Trudeau in Hamilton on April 8.Photographer: Galit Rodan/Bloomberg

Canadian governments need to resist pressure to spend revenue windfalls from higher commodity prices in order to help slow inflation and shore up the nation’s balance sheet, the International Monetary Fund said. 

The IMF said inflation in Canada is being fueled in part by excess demand and a tight labor market, and continued monetary and fiscal tightening will be required to rein in price gains. The federal government, meanwhile, should consider reestablishing fiscal anchors to enhance credibility.