Canada's Trudeau taps ally Freeland as finance minister in agenda reset

OTTAWA (Reuters) – Canadian Prime Minister Justin Trudeau appointed his close ally and deputy Chrystia Freeland as the country’s new finance minister on Tuesday amid plans to outline a revamped agenda and pandemic recovery plan.

Freeland, 52, a former journalist and foreign minister, becomes the country’s first female finance minister, replacing Bill Morneau who resigned on Monday amid friction with Trudeau.

The appointment comes after a tumultuous week for the government that ended in Morneau’s departure. Sources told Reuters that Morneau and Trudeau had clashed over pandemic spending, including on green initiatives the prime minister views as key for the economy.

Freeland, who is considered Trudeau’s most likely successor as Liberal Party leader, spearheaded negotiations of the United States-Mexico-Canada (USMCA) trade pact in 2017 and 2018 as Canada’s foreign minister. She had previously been minister for international trade. That experience and her relationships with provincial premiers make her a good choice for finance minister, economists said.

After the Liberals won an election last year, Freeland was named deputy prime minister, a position she will keep, and took over as intergovernmental affairs minister, charged with improving relations with the 10 provinces. That job now goes to colleague Dominic LeBlanc, who is also close to the prime minister.

Trudeau is scheduled to give a news conference at 3:30 p.m. ET (1930 GMT).

The prime minister, who presides over a minority government, also plans to end this parliamentary session and restart a new one in October, when he will deliver a new agenda outlining a COVID-19 pandemic recovery plan, one source said.

Freeland now will be tasked with reviving an economy crippled by the COVID-19 pandemic, with the budget deficit this fiscal year forecast to hit C$343.2 billion ($253.4 billion). That would be the largest shortfall since World War Two.

“Freeland does not have the business background of her predecessor, but she managed the ministry of foreign affairs file remarkably well, including dealing with the difficult renegotiation of free trade with the United States,” said Craig Alexander, chief economist with Deloitte Canada.

“Markets will likely anticipate that the new minister of finance will work exceedingly well with the prime minister.”

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The Canadian dollar notched its strongest intraday level in nearly seven months at 1.3148 per U.S. dollar, or 76.06 U.S. cents, on Tuesday amid broader declines for the greenback. Bond yields were little changed.

Markets appear reassured because Trudeau is taking advice from some economic heavyweights, including former central banker Mark Carney.

Before entering politics in 2013, Freeland worked with several media companies, including the Financial Times, the Globe and Mail, and Reuters.

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