Oliver sees fleeting oil hit amid U.S. dollar fall

‘We are able to withstand the shock’: minister

• The combination of a weaker Canadian dollar, rising demand in the U.S. and lower borrowing costs means Canada’s economy will weather the impact of falling oil prices, Finance Minister Joe Oliver said.

He said he agrees with the Bank of Canada’s recent assessment that falling oil prices will be a temporary drag, and exporters will soon regain their footing as the main drivers of growth.

“Our growth is going to be better than most of the G-7 countries,” Mr. Oliver said in an interview in Istanbul, where he’s attending a meeting of finance ministers and central bankers from the Group of 20. “We’re in the group of countries that is contributing to global growth. Many countries are not.”

Mr. Oliver and other Canadian policy makers are trying to cope with a 50% plunge in global oil prices that is shrinking incomes and curbing government revenue. The oil shock, which parliamentary analysts forecast could cost federal government coffers $8 billion in lost revenue this year, prompted Oliver to postpone the release of his annual budget and Bank of Canada governor Stephen Poloz to cut interest rates last month.

The weaker currency, down 12% against the U.S. dollar over the past year, “will help in some areas of the Canadian economy,” Oliver said, citing the benefits to manufacturers. Even without the weaker dollar, the government is hoping a pickup in the U.S. economy will prompt companies sitting on billions of cash holdings to ramp up investment.

“It’s unambiguous that the American economy is on the move, the dollar aside, that will get people to invest more,” Mr. Oliver said.

There is no scenario under which the governing Conservatives will veer off from plans to balance the budget in the next fiscal year, he said, brushing aside suggestions policy makers are relying too much on monetary policy to spur growth.

Any move away from Canada’s current fiscal path would

Our growth is going to be better than most of the G-7 countries

undermine investor confidence and aggravate the oil shock, Oliver said.

“Because we are in such good state, we are able to withstand the shock a lot better,” he said.

Before releasing the fiscal plan, which has been delayed until at least April, the government is hoping for the oil market to settle.

“We’re waiting out for a little bit of stability in prices,” Mr. Oliver said.