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C$ Rise Is 'Major Uncertainty' for Budget-Goodale

Monday, January 31, 2005 08:01 EST

OTTAWA (Reuters) - The rapid recent rise of the Canadian dollar had created a "major uncertainty" ahead of the next federal budget, Canadian Finance Minister Ralph Goodale said on Monday.

Goodale also told CBC Radio that the rise of the dollar meant the economy had to make "a good deal of adjustment". The currency rose around 30 percent in the two years to early 2005.

Asked about the impact the booming currency was having on drafting the budget, Goodale replied: "It creates a major uncertainty."

Goodale has not yet set a date for his next budget, but it is expected in late February or early March.

The ruling Liberals have only a minority in the Canadian Parliament, and Goodale's task is made more complicated by the fact that opposition parties are suggesting that they may force an election if the government ignored their demands.

Goodale has for the last year or so stressed that fluctuations in the Canadian dollar are the major downside risk to the domestic economy.

"It's not so much the magnitude of the change but the speed of the change," he said, stressing Canada's economic fundamentals were strong.

He added: "But when change happens that rapidly, it obviously entails a good of adjustment and I think we ... may be beginning to see the first part of that downside risk ... It has the potential to slow our growth."

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