Canada's Harper Says He May Propose Another Stimulus Package

By Theophilos Argitis

Nov. 15 (Bloomberg) -- Canadian Prime Minister Stephen Harper said he is considering a proposal for an additional economic stimulus package that may generate the country's first budget deficit in more than a decade.

The increase in spending would be part of global efforts to boost demand in the world economy, Harper said today in Washington, following a meeting of heads of state from the Group of 20 countries. Canadian Finance Minister Jim Flaherty said in an interview with Bloomberg News that he may expedite fiscal measures planned for next year's budget.

``If there is a worldwide agreement that we will engage in sufficient stimulus to do our part of carrying global economic demand, we will fulfill our part of that agreement,'' Harper told reporters. ``If we do short-term deficit spending as a deliberate policy,'' he said, ``we will have to be able to demonstrate to Canadians that those deficits will genuinely be short term.''

Growth in the world's eighth-biggest economy will slow to 0.6 percent this year, the lowest level since 1991, the Bank of Canada said on Oct. 23. Canada is confronting weak demand from the U.S. and slumping prices for commodities, which generate about half the country's export revenue.

Leaders from the biggest developed and emerging nations today agreed more must be done to shore up a global economy sliding into recession. Harper said there was ``recognition'' at the meeting that monetary policy wasn't sufficient to lift the world economy out of its current malaise.

Canada's agreement to participate in global stimulus ``could well result'' in a deficit next year, Flaherty said.

``The next budget may be earlier than usual'' to accommodate the additional stimulus, he said in the interview. ``Things are getting worse globally.''

To contact the reporter on this story: Theophilos Argitis in Washington at targitis@bloomberg.net.