I would be remiss if I did not also mention how Canada cleaned up its public sector balance sheets during the 1990s. Many difficult and unpopular decisions had to be taken, by both the federal and provincial governments. But Canada has turned a vicious circle of rising deficits and debt into a virtuous circle of balanced budgets and falling debt.
Reducing, and ultimately eliminating, the deficit in the 1990s helped Canada's international credibility and led to a reduction in the risk premium demanded by investors. The fiscal improvement gave the Bank of Canada the flexibility to lower interest rates more easily when economic circumstances warranted.