OTTAWA – This weekend's meetings of the Group of 20 leading nations are likely to keep pushing Europe and the United States to confront their debt troubles, Canadian Finance Minister Jim Flaherty said on Tuesday.
The Mexico City meetings of G20 finance ministers and central bank governors follow talks in Tokyo more than two weeks ago, which endorsed a checklist of policy reforms aimed at pressuring Europe and the United States to tackle their debt troubles.
"I hope we will continue the discussions that we had in Tokyo to encourage our European colleagues to get on with the structural reform that needs to be accomplished in Europe, including the banking union in Europe," he told reporters.
"I think we'll continue to push on that front," he said, acknowledging some progress in Europe since the Tokyo talks.
He also highlighted acute concern over the so-called fiscal cliff in the United States of huge automatic spending cuts and tax rises set to occur on January 1 if Congress fails to act before then.
"I'm not even sure which American officials are going to be in Mexico City on the weekend, but we want to encourage our American friends to get on the issue of the fiscal cliff as soon as possible after the U.S. election," he said.
In separate parliamentary testimony, Bank of Canada Governor Mark Carney highlighted Europe's debt crisis as the biggest external risk facing Canada, but the central bank assumes it will be contained.
"The next (risk), in the near term, is the potential resolution or not of the so-called fiscal cliff in the United States," he said.
"If the fiscal cliff were not to be resolved and all the measures were to come into force on the books in the United States, the U.S. would almost certainly be in recession next year with a knock-on effect obviously for Canadian exporters, business investment, etc. We're not predicting that but it is a possibility."
(Reporting by Randall Palmer; Editing by James Dalgleish)