The global financial crisis is prompting widespread worry over employment prospects and some companies are watching their sales falter.

One key element in this decline here in Canada is the lack of available financing. Canada’s Economic Action Plan is helping to free up more financing for Canadian families and businesses. By taking action to encourage lending between Canadian banks and helping more businesses get the financing they need, the effects of the global economic crisis are being diminished.

Financing is an essential part of life in Canada. It gives businesses the flexibility to buy equipment and expand operations. It helps families purchase vehicles and homes. Unfortunately, since the start of the global financial crisis, credit markets have become tighter as the available pool of resources has shrunk. This means that credit-worthy families and businesses are sometimes unable to get financing for their large purchases.

This domino-effect results in the purchase of fewer cars and homes, and businesses are feeling the squeeze from lost revenue.

The global economic problem took hold when a number of banks in the United States and United Kingdom collapsed under the strain of too much bad debt. In Canada, our banks remain strong and effective, and have not had any of the problems of our foreign counterparts. In fact, many international experts cite Canada’s financial sector as one of the soundest in the world. Credit markets are international, however, and our banks depend on free-flowing international credit to do business. The tight international market has led to a tight domestic market.

Late last year, the Conservative government took action to give our banks some extra room to lend money by accelerating the transfer of up to $25 billion in mortgages and loans. This was a good start as it helped to hold off the effects of the global crisis in Canada for longer than many countries. But, when our largest trading partner is in trouble, we are going to feel the negative effects here at home.

It is important to remember that in Canada, we have not given taxpayer money to the banks. Canada’s Economic Action Plan introduced at the end of January by Finance Minister Jim Flaherty helps more families and businesses get the financing they need for big purchases. We’re providing additional support to small businesses through organizations and programs like Export Development Canada, the Business Development Bank of Canada and the Canada Small Business Financing program. We’re also helping more families get mortgages by expanding the Insured Mortgage Purchase Program.

Our plan gives banks more flexibility to get access to cash from the credit market to pass along to Canadian families and businesses. As a result, families and businesses can take advantage of low interest rates and make purchases that stimulate our economy.

Canada’s Economic Action Plan is helping to ensure that Canada emerges from the global downturn stronger and more competitive than ever before.

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The audio version of Garry's February 23, 2009 op-ed column can be heard by clicking here