Canada Needs Economic Stimulus as Ottawa Cuts Dependence on Oil Sands

The Canadian authorities should create a monetary stimulus package to address potential problems caused by the reducing role of oil sands in the country’s economy, the Centre for International Governance Innovation (CIGI) said in a report on Tuesday.

WASHINGTON, March 15 (Sputnik) — The Bank of Canada should be prepared to offset further economic drag from the oil sands with monetary stimulus, delivered through both interest rates and the exchange rate, the report stated.

The CIGI argued that emission restrictions around the world, which are implemented to address the issue of climate change, will "destroy" demand for oil in the coming decades.

Stranded oil assets could impact financial institutions and the Bank of Canada should ensure lending institutions have safeguards against their loan exposure to the oil sands that could go bankrupt, CIGI noted.

Canada’s National Energy Board, CIGI added, must take into account climate change and its impact on future oil demand, while approving new pipelines.

The Canadian economy has been suffering from low oil prices, which have cut profits of major producers and decreased the value of the Canadian dollar.

In February, the International Energy Agency reported that Canadian oil production could significantly slow down amid heightened environmental concerns and lack of access to new markets.