Canadian Prime Minister Justin Trudeau said on Wednesday his government would provide C$27 billion ($18.6 billion) in direct support to families and businesses struggling because of the coronavirus outbreak, and stood ready to do more.
It was his biggest move yet to combat the economic impact of the fast-spreading virus, which has infected some 700 Canadians in all 10 provinces, killing nine. In an unprecedented move, Canada and the United States shut their vast common border on Wednesday to non-essential travel.
The aid package did little to assuage investors. Canada’s main stock market fell 6% and losses for the loonie were the biggest in nearly 10 years.
The government will provide C$55 billion ($38 billion) in additional aid to businesses and households through tax deferrals. The combined measures will put more than 3 percentage points of the country’s annual output into circulation, officials said.
“No Canadian should have to worry about paying their rent or buying groceries during this difficult time,” Trudeau told reporters outside his home, where he has been under quarantine since last week when his wife tested positive for COVID-19, the respiratory disease caused by the coronavirus.
“(These) economic measures will ensure that our economy rebounds after this. … Our government is prepared to do more.”
Ottawa “will do whatever it takes” to support the economy, Finance Minister Bill Morneau told reporters later, calling the measures a first phase of economic stimulus meant to offset the “profound impact” of the epidemic.
The government will provide up to C$900 every two weeks to workers who must stay home but do not qualify for unemployment benefits, and a onetime special payment for low- and modest-income households, among other measures.
Talks with airlines and the oil-and-gas sector about specific aid to them are ongoing, Morneau said. Ottawa will soon announce a significant investment in Alberta – the heart of the country’s struggling energy sector – which will include funding to clean up orphan wells, sites no longer in production that have no legal owner.
“We still think the government needs to do more to secure a strong recovery further down the line,” Stephen Brown, a senior economist at Capital Economics, said in a note.
In recent days, authorities have shuttered schools, closed bars and restaurants, and are encouraging people to stay at home.
MORE RATE CUTS?
Bank of Canada Governor Stephen Poloz, who spoke alongside Morneau, left the door open to further interest rate cuts and to quantitative easing, an emergency stimulus measure that could include the purchase of government bonds. Last Friday, the Bank of Canada slashed its key interest rate by 50 basis points for the second time in nine days.
On Wednesday, Trudeau and U.S. President Donald Trump agreed to stop all non-essential travel between the two countries.
“Supply chains including trucking will not be affected by this new measure,” Trudeau said.
Alberta Premier Jason Kenney said his oil-producing western province was also taking additional steps, including suspending corporate income tax collection until Aug. 31, matching a federal measure, deferring some utility charges for 90 days and making individual payments of C$572 to people who are self-isolated because of symptoms of the illness.
The province’s chief medical officer, Deena Hinshaw, said it was also limiting visitors to hospitals to one person per patient. No children or people exhibiting any symptoms of illness would be permitted.