Canada needs to stick with the Conservative's stimulus plan in order to maintain the economy's "fragile recovery," Finance Minister Jim Flaherty said Friday.
Despite signs of economic recovery, Flaherty said that Canada remains vulnerable to recessionary pressures, which could re-emerge if spending is cut off early.
"We have to complete the stimulus (and) make sure we have an entrenched recovery," he told CTV's Canada AM.
Flaherty's comments came on the same day as he announced $200 million in federal funding for more than 500 infrastructure projects in Toronto.
The funding, taken from Ottawa's $40-billion stimulus fund, are expected to create about 7,000 jobs in the city, which has one of the country's highest unemployment rates.
Flaherty noted that when the stimulus is complete, the government will curb the large-scale investments that were necessary to jump-start the economy.
With presumed economic growth and increased revenues in place, the focus will then turn to balancing the budget -- a process Flaherty has suggested could take six years.
On Thursday, Flaherty announced that the Conservative government will run deficits until at least 2015 and that the deficit for 2009 will be about $55.9 billion -- about $5 billion more than initially projected.
After hearing the news about the deficit, Liberal Leader Michael Ignatieff said Flaherty has a "credibility problem," saying that the changing numbers are the latest example of the Conservatives misstating the facts.
Responding to Ignatieff's criticism, Flaherty said the new deficit figures are an average of projections made by private-sector economists and that the higher-than-expected deficit figures are a symptom of the worldwide recession.
"Yes, we've seen deterioration in the economy this year. This is a fact. This has been the worst year globally in the economy -- in the global economy -- since the Second World War," he said.
"And if Mr. Ignatieff had been paying attention, he would have noticed that, as most people in the world have noticed."
Don Drummond, the chief economist at TD Bank, said the government had projected a deficit that was indeed in line with what had been predicted by private-sector economists.
And he acknowledged that it has been difficult to chart out exactly how the Canadian economy will perform as it emerges from the recession.
"The Canadian and U.S. economies have come through a terrible shock, it's very uncertain of the path, the way out of that," Drummond said.
"I have some sympathy that it's a difficult environment to do planning when you have that much economic uncertainty," he added.
