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2003 OECD Economic Surveys: Canada 2003

image of OECD Economic Surveys: Canada 2003

This 2003 edition of OECD's periodic survey of Canada's economy focuses on key challenges including raising living standards, international migration, and managing fiscal pressures in the medium and long-term.

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Managing Fiscal Pressures in the Medium and Long Term

The 1990s was a decade of enormous fiscal consolidation, with the general government balance swinging from a deficit of 9 per cent of GDP in 1992-93 to a surplus of 3 per cent in 2000-01. The federal government achieved a balanced budget in 1997-98, with the provinces in aggregate following two years later (Table 26). As a consequence, general government net debt has fallen from a peak of 68 per cent of GDP in 1995 to around 40 per cent in 2002, compared with an (unweighted) OECD average of around 30 per cent.85 This retrenchment was achieved through a combination of expenditure and revenue measures, but aggressive cutting of programme spending was a key factor (Figure 38). Significant reforms to federal and provincial income support programmes in the mid-1990s also played a major role. While expenditure cuts occurred in almost all areas, they were not indiscriminate: a Programme Review process ensured that the lowest priority areas were hit hardest.

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