The head of the International Monetary Fund says Canada remains in one of the strongest fiscal positions among G7 countries, even as Ottawa prepares to run a higher deficit this year.

IMF Managing Director Kristalina Georgieva made the remarks Thursday during the organization’s annual meetings in Washington. Asked about the fiscal health of advanced economies, she said some G7 members face deeper challenges, while “Germany and Canada stand up in that regard.”

Georgieva added that Canada has room to make targeted investments in areas that could boost productivity and long-term growth. She pointed to housing, infrastructure, and energy as key sectors where strategic spending could strengthen the country’s economic resilience.

Her comments come as the IMF forecasts a gradual slowdown in global growth — from 3.3 per cent in 2024 to 3.2 per cent in 2025, and 3.1 per cent in 2026 — as higher borrowing costs and geopolitical uncertainty weigh on economies worldwide.

The federal government’s upcoming fall fiscal update is expected to show a larger deficit, driven by ongoing spending on housing and affordability measures. Economists say the IMF’s remarks could bolster the argument that Ottawa still has capacity to balance fiscal prudence with targeted investments.