Canada’s federal finance minister is urging his provincial counterparts to heed the lessons of Europe and keep tightening their budgets as he seeks to keep Canada’s debt-to-GDP ratio the lowest in the Group of Seven rich nations.

In remarks summarizing a conference call he held with the provincial ministers on Wednesday, Finance Minister Jim Flaherty warned on Thursday that the domestic economy could be hurt by the European debt crisis and the stalled U.S. economy.

We see the lesson in Europe if public finances are not sustainable and budgets are not balanced

“I recognized my counterparts for their work in controlling expenditures and reducing their deficits, while reinforcing the need for all governments in Canada to maintain that focus,” Flaherty said in the emailed remarks.

“We see the lesson in Europe if public finances are not sustainable and budgets are not balanced,” he said.

Canada’s federal budget deficit amounts to about 1.5% of gross domestic product and is on track to be eliminated by 2016. But the economically and politically powerful central provinces of Ontario and Quebec are grappling with more serious shortfalls.