TORONTO – Canada's finance minister reiterated his frustration with Europe and urged countries there to take overwhelming action to recapitalize their banks and deal with the sovereign debt crisis ahead of a two-day visit by German Chancellor Angela Merkel.
Finance Minister Jim Flaherty said Wednesday it's frustrating because they've known for years what needs to be done, but he said it's difficult to solve because the European Union lacks a central ministry of finance.
"Not enough has been done. They need to do much more," Flaherty said.
Merkel will have a private dinner with Canadian Prime Minister Stephen Harper at the prime minister's retreat in Gatineau, Quebec, on Wednesday. They meet again in Ottawa on Thursday before holding a press conference.
Merkel is fresh off her vacation and markets will be looking for any comments about whether Germany is ready support European Central Bank President Mario Draghi's attempts to do "whatever it takes" to save the Euro zone.
Merkel and Harper share the view that austerity, and not more government stimulus, is necessary. Harper, a conservative, has said that fiscal discipline and economic growth can go hand in hand. Flaherty noted that Canada has reduced its deficit in half since 2009 and is on track for a balanced budget at a time of relatively modest growth.
"You can try to strike that balance where you have modest growth, which is what we have in Canada today, and yet maintain your fiscal track of balanced budgets. It can be done," Flaherty said.
Flaherty also reiterated Canada's refusal to contribute to a global bailout package for Europe through the International Monetary Fund. He said Europe is wealthy and has the resources to solve the problem by itself. The United States has also declined.
Merkel and Harper are also expected to discuss Canada's bid for a free-trade pact with the European Union. Harper wants an agreement by the end the year. He said this week there are some rounds of negotiations still to go.
Flaherty said despite Europe's struggles, Canada remains very interested because the EU is still the largest market in the world in terms of the size of its middle class.
Canada's commodity-rich economy has fared better than other nations in the G-7 in recent years. There was no mortgage meltdown or subprime lending crisis in Canada, and its banks are rated among the soundest in the world.