Jim Flaherty says Island has vital role in world economyBy Gareth FinighanCanadian Finance Minister Jim Flaherty says it is important for the world economy that Bermuda emerges from recession — and is confident that the Island will be able to do so.Mr Flaherty is here for two days of meetings with Government and business leaders to examine ways of developing trade and investment opportunities between Bermuda and its G8 neighbour.“Canada is strong in financial services, Bermuda is strong in financial services, we have a common history together in terms of the rule of law and I think our respective populations are comfortable with each other so there’s lots of room to grow the relationship and that’s why I’m here,” Mr Flaherty told The Royal Gazette.And he said he was confident Bermuda will bounce back after four years of economic decline.“I think it’s important for the financial world that Bermuda does well because Bermuda is an important financial centre globally so that would be ideal,” Mr Flaherty said.“But I also see the strength of the financial services sector here in Bermuda, there are lots of strengths in human resources and lots of positives aspects to the Bermuda economy so I’m quite positive about it in the medium term.“The way the world has evolved in the last five or six years, safe havens are important and Canada is a safe haven and Bermuda certainly has a strong reputation in financial services and this is not true of all the countries in the G8 or G20 with whom I deal regularly.”The two countries signed a Tax Information Exchange Agreement in 2010, an agreement that Mr Flaherty said was “going very well”.And while Canada is now looking to close tax loopholes and crack down on tax dodgers, Mr Flaherty said Bermuda was not on his target list of tax havens.“The TIEA has gone very well between Canada and Bermuda. It creates transparency and allows for the flow of information.“There’s much more transparency in the exchange of tax information than there was three or four years ago.“Bermuda is not a tax haven according to OECD and Bermuda has a TIEA with Canada, so we’re all good.”Canada has been able to weather the economic storm of global recession better than most economies, in part by balancing budgets and keeping down public debt, according to Mr Flaherty, who has been Finance Minister since 2006.It is an economic approach that mirrors that of the OBA Government.Finance Minister Bob Richards has pushed for a two-pronged strategy to rebuild the economy — getting the national debt down by reining in public spending, and attracting foreign investment to the Island.“Financial crises will occur, so how can countries like Canada prepare?” Mr Flaherty said. “The way we prepared was by balancing our budgets and running surpluses and using those surpluses to pay down public debt.“Canada has consistently advocated for some stimulus for economic growth but also making sure we get back to balanced budgets.“We have seen the consequences in some of the European countries of a failure to go in that direction.“We have a medium-term plan to get back to balanced budgets by 2015 and we’re following that track.“It accomplishes two things — it gets the country ready for the next time there’s a financial crisis of some kind and it also encourages investment and encourages confidence in the economy and that’s important.“In the 1980s and particularly in the 1990s, Canada was in a very difficult position. The IMF was looking closely at Canada, the credit rating was downgraded and the New York Times referred to the Canadian dollar as the Canadian peso.“So when you look at some of the European countries that have got into trouble now, these are not insurmountable problems.“Countries with resolve and strong leadership and some risk taking obviously, can surmount these issues, but it takes time.”