At­tack ads fol­low bank rate cut

The Guardian (Charlottetown) - - CANADA -

The Con­ser­va­tive gov­ern­ment tried to turn bad eco­nomic news to its po­lit­i­cal ad­van­tage as the Bank of Canada out­lined a less-than rosy fi­nan­cial forecast for the rest of the year that could threaten the gov­ern­ment’s pledge to bal­ance the bud­get.

The cen­tral bank pro­jected the econ­omy would grow by just 1.1 per cent this year _ much lower than the 2.0 per cent that was ex­pected when the Con­ser­va­tives put to­gether their last bud­get.

If the bank’s dis­mal forecast comes to pass, the $1.4 bil­lion sur­plus pro­jected in the 2015 bud­get could well be­come a deficit, since fed­eral cof­fers would be $4.1 bil­lion slim­mer, ac­cord­ing to a sen­si­tiv­ity anal­y­sis in the April bud­get.

The op­tics of run­ning a deficit could be tricky for the Con­ser­va­tives as they head into an elec­tion tout­ing them­selves as the only party that could man­age fed­eral fi­nances in rough eco­nomic times. The gov­ern­ment could well be forced to find about $2 bil­lion in sav­ings to bal­ance the books.

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