Canada’s Finance Minister Jim Flaherty urged the U.S. on Wednesday to avoid a default or the consequences for the world would be negative in a major way. He said no one needs any disorderly action in financial markets. Major commodity producer Canada, with its strong trade and financial association with the U.S., is at risk too for economic troubles. U.S. lawmakers meanwhile negotiate to strike a deal to empower Congress to raise the $14.3 trillion debt limit before August 2. That is the date the Treasury Department said it will run on zero and will be unable to pay government obligations. On Tuesday, U.S. Federal Reserve Chairman Ben Bernanke warned that if the borrowing limit is not raised, there’ll be a great loss of confidence.
Canada may have a fairly manageable federal deficit but Flaherty said that it will be useless if it exists in a vacuum. He expressed concern over disputes just to arrive at a concession and over the setback in dealing with euro zone’s debt burden. He said non-resolution is a detriment to the international system. He didn’t say which candidate Canada might support to be the successor of Dominique Strauss-Khan as International Monetary Fund head. But the decision is due within the next week or so, he added. Strauss-Khan left the post after his arrest in New York on sexual assault charges. Among the names in the shortlist are French Finance Minister Christine Lagarde and Mexico’s central bank chief Agustin Carstens. The two are very qualified, added Flaherty.