Canada

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Canada?s resilient economy will continue to rebound following the Liberals? reelection to a minority government in the September snap election. Countercyclical fiscal and monetary policy response will facilitate a recovery. --A federal system of government that delivers coordinated policies, social cohesion, and a resilient economy will continue to underpin the sovereign credit rating on Canada. --Policy actions and automatic stabilizers will lead to a wide general government deficit in 2021, which will continue to spur the general government debt burden higher. --Canada?s strong institutions will anchor the government?s new mandate as the economy recovers. --We expect the fiscal outturns of 2020 and 2021

...We expect broad policy continuity under a reelected minority Liberal government. As was true under the previous government, we expect the new government will rely on support of opposition parties in Parliament to pass legislation and budgets. Nevertheless, we expect overall political cohesion, reflecting Canada's strong institutions and stable democracy. Credible monetary policy; a sound net external position; and a wealthy, export-oriented economy will continue to support the `###' rating on Canada. Canadian institutions, led by the federal government and the Bank of Canada (BoC), have helped to mitigate the effects of the COVID-19 pandemic on the Canadian economy and domestic financial markets by enacting a strong and timely policy response. The debt associated with funding this response will lead to a debt burden that is materially higher than it was before the pandemic. We expect this higher debt level will persist during the forecast horizon. Nevertheless, although fiscal and debt...

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