Harper says he's confident GM will stay in Canada

TORONTO, (Reuters) - Canadian Prime Minister Stephen Harper said on Tuesday he is not concerned about the possibility of General Motors Corp (GM.N) moving out of Canada as the Detroit-based company restructures its operations.

We've had good discussions with the company, Harper told reporters in Toronto. Obviously, there is a range of options. and the restructuring itself will be quite complex. But I'm confident that with Canada, with the partnership with Ontario, coming to the table with our share of funding that we'll maintain a strong industry in this country.

GM and Chrysler [CBS.UL] are due to present their restructuring plans to the U.S. government on Tuesday and then to the governments of Canada and the province of Ontario on Friday.

Harper added that he does not rule out further job losses in the auto sector, but said Canada would maintain its share of North American auto production, which is around 20 percent.

Looking to the rest of the Canadian economy, Harper said it is extremely difficult to make economic forecasts for this year, but conceded the 2009 federal budget is based on the assumption the economy will worsen.

We are not going into deficit C$34 billion ($27 billion) this year because we think the economy is going to stay just the way it is, he said. We are doing that on the anticipation that we are going to face continued challenging economic news this year.

He said that Canada's economy is in better shape than most other countries going into the economic downturn, adding that the country's financial sector is strong and that the housing sector does not have the structural problems that the U.S. housing sector has.

On Canada-U.S. relations, Harper said the government would closely watch Washington's implementation of buy-American provisions in its economic stimulus packages, but that he expects the United States will live up to its trade obligations.

Harper said President Barack Obama's comments on trade have been very encouraging. ($1=$1.26 Canadian) (Reporting by Ka Yan Ng, writing by John McCrank; editing by Peter Galloway)