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| - The IMF on Thursday praised Canada's pandemic response, saying massive government aid set in motion a strong rebound in an economy forecast to grow 4.4 percent this year. But it also urged Prime Minister Justin Trudeau's government to "communicate more clearly" its fiscal objectives and provide "greater clarity" on when it may lift aid funding. Ottawa has not unveiled a budget in two years, citing uncertainty created by the pandemic. Consultations are ongoing now ahead of its release at an unspecified date in the coming months. "The recent sharp rise in public debt increases the importance of clearly specifying a medium-term fiscal anchor... to guard against a potential weakening of credibility in the fiscal framework," the International Monetary Fund said in its annual report. "Beyond the pandemic, it remains necessary to continue implementing structural reforms to increase the productive capacity of the economy," it added. The Canadian economy, the IMF said, is expected to rebound this year -- after contracting 5.4 percent in 2020 -- with a boost from higher oil prices and pent up domestic demand for goods and services, as well as trickle from a US$1.9 trillion injection to rescue the US economy. It also projected Canada's unemployment rate to fall to 8.1 percent this year and 6.9 percent in 2022 -- still above pre-pandemic levels. The Bank of Canada in January forecast growth of 4.0 percent and 5.0 percent in 2022, while some analysts have painted an even rosier trip on the road ahead. The economy was humming along at near capacity when the pandemic was declared in March 2020. Since then, more than Canadian 20,000 lives have been lost to Covid-19. Ottawa responded by dolling out billions of dollars in emergency aid, which amounted to almost 15 percent of Canada's GDP and included spending on health care as well as support for households, firms, and vulnerable groups through cash transfers and wage subsidies. The IMF said this softened the blow but "at a significant cost." Ottawa, it noted, also provided liquidity support through tax deferrals, credit facilities and loan guarantees, while the Bank of Canada cut its key lending rate to a historic low of 0.25 percent. The pandemic exposed social inequalities across Canada, which Ottawa has pledged to address as it looks to the horizon. "Addressing gaps in the social safety net would be important going forward," the IMF commented. It commended Canada's efforts to tackle climate change in its recovery plans, while warning that house prices and household debt are likely to continue rising as mortgage rates remain at historic lows. amc/ft
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