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That could mean allowing budget deficits to widen and keeping the Bank of Canada’s policy interest rate at 1% for longer, it said.

The IMF said risks to its forecasts for Canada are “tilted to the downside,” citing concerns that the weakness in the U.S. and Europe could hurt the economy, as well as the impact of a decline in commodity prices.

“The main challenge for Canada’s policy-makers is to support growth in the short term while reducing the vulnerabilities that may arise from external shocks and domestic imbalances,” the body advises.

“Although fiscal consolidation is needed to rebuild fiscal space against future shocks, there is room to allow automatic stabilizers to operate fully if growth were to weaken further.”

The statement appears to walk the line between backing Finance Minister Jim Flaherty’s latest stand-pat budget which did not add significantly to already announced austerity measures, while also stressing that if conditions deteriorate, Ottawa should loosen economic stabilizers such as unemployment insurance and other support systems to promote growth.

The report did not mention Flaherty’s self-imposed deadline of balancing the budget by 2015, when Canada will have its next federal general election.

The IMF also has some advice for the Bank of Canada — don’t think about tightening monetary policy until the economy improves.

“The current monetary policy stance is appropriately accommodative,” it says, “and the beginning of the monetary tightening cycle should be delayed until growth strengthens again.”