Economic storm brewing for Manitoba ~ Manitoba Forward

Manitoba’s mandate-hobbled Auditor General (who lacks the power to “audit” policy and policy outcomes) has provided stark information on the provincial government’s finances. Borrowing is out-of-control. What Pallister’s own Treasury Board describes as economic “storm clouds” loom in the future — rising interest rates on rising debts, Hydro’s rocketing borrowing, and credit downgrades.Pallister forecast a balanced provincial budget by the end of his coveted second term, which would be 2024, assuming his government survives with its majority in the 2020 election. The only way his forecast works depends on his new carbon tax, ramping up Hydro rates well beyond the annual inflation rate, and slimming civil servant staff while capping pay hikes to sub-inflation levels for a decade.The auditor’s information reveals that the debt-choked Manitoba government will have difficulty slaying the provincial deficit as interest rates inevitably increase. For just every 1% increase in rates — once current debts are renewed — would add at least another $220 million more in interest costs annually, plus eventually more than $250 million more annually for utility customers.With $15 billion of direct provincial debt to mature within five years and additional provincial core borrowing of another $2 billion, annual interest cost increases will build quickly. As for Hydro, while replacing the $4 billion of debt to mature over the next five years will not push up Hydro’s costs, new Hydro debt of as much of another $10 billion will be subject to higher rate hikes — extra costs to be recovered through utility rate hikes.

Source: Economic storm brewing for Manitoba ~ Manitoba Forward