By Paul Vieira
OTTAWA–Canada intends to present an economic update on April 28 that will shed light on the impact of higher energy prices on the government’s bottom line.
Finance Minister François-Philippe Champagne said Tuesday the update would reinforce government efforts to rebuild an economy that became too reliant on trade with the U.S. to spark growth.
Canada’s Liberal government changed last year the timing of the government’s budgeting process. Under the new system, officials now issue an annual budget plan in the fall, to be followed by an update in the spring. Previously, it was the reverse, with an update in the fall and the budget in the spring.
Earlier Tuesday, Canada said it would provide a temporary fuel-tax cut–starting next week until Labor Day– to help households cope with the financial strain from higher energy prices. Gas prices have climbed more than 30% due to conflict in the Middle East, pitting the U.S. versus Iran, which has largely stalled oil-tanker traffic through the Strait of Hormuz.
Canada is a net exporter of crude oil, so national income stands to increase from higher energy prices. Economists at BMO Capital Markets estimate a 40% rise in oil prices for a full year could boost government revenue by nearly 5 billion Canadian dollars, or the equivalent of US$3.62 billion.
BMO economists expect the overall impact on federal finances from higher energy prices this time to be neutral, as higher revenue would be offset by slower economic activity and a rise in borrowing costs. Their estimate was provided prior to the Liberal government’s plan for fuel-tax relief.
The Bank of Canada, in its most recent economic outlook, anticipated 1.1% growth this year. As it happens, the central bank issues its next rate-policy decision the day after the spring economic update, on April 29.
The International Monetary Fund on Tuesday said it expects Canada to record 1.5% growth in 2026.
Write to Paul Vieira at paul.vieira@wsj.com
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
04-14-26 1540ET