Fitch: New minority parliament raises fiscal questions for Canada

Analyzing the outcome of Canada’s 43rd general election, Fitch Ratings said that the new minority parliament raises “fiscal questions for Canada.”

“Return of a hung parliament following Canada’s recent federal election should not lead to significant changes to major economic policies,” Fitch explained. “Potential risks to Canada’s debt stabilization would rise if there were an economic downturn.”

The USD/CAD pair, which slumped to 1.3070 area as rising crude oil prices boosted the demand for the commodity-related Loonie, ignored Fitch’s comments and was last seen trading at 1.3080, down 0.1% on the day. Below are some additional takeaways, per Reuters.

“Canada’s 2020 budget will be key signal if new parliamentary makeup will lead to greater spending pressures, increased federal deficit.”

“Potential for federal fiscal loosening could raise questions regarding the trajectory of Canada’s high general government debt/gdp burden.”

“Key issues like USMCA trade agreement are likely to find sufficient consensus for passage given support from major parties in Canada.”