NDP approves $37 billion in borrowing

Order-in-council follows plans spelled out in budget through to 2020 fiscal year

The NDP government has given authorization for $37 billion in borrowing, including new plans for a $5-billion cash reserve.

The measure approved by cabinet in an order-in-council this week raised alarm bells in the Liberal opposition, but the government said the measure is business as usual and in line with the last provincial budget.

Finance department spokesman Mike Berezowsky said the order simply gives authority to the borrowing plans running through the end of the 2019-20 fiscal year that were laid out in the spring budget.

“It’s not like we’re borrowing $37 billion tomorrow,” said Berezowsky.

“What this $37 billion represents is ... the next two fiscal years as published in the budget 2017 fiscal plan.”

The 2017-18 budget projects the government will borrow $32 billion in the 2018-19 and 2019-20 fiscal years for capital and operating costs, refinancing of mature debt and covering shortfalls incurred by the balancing pool.

But Berezowsky said the government is giving itself room to borrow an additional $5 billion as a fiscal “cushion.”

Finance Minister Joe Ceci was not made available for an interview Friday, but in a statement, said the move is prudent.

“We are establishing a $5-billion reserve to ensure there’s cash on hand to protect public services against unexpected costs, major natural disasters, or a global credit crunch, such as the one set off by the U.S. sub-prime mortgage crisis in 2007,” said Ceci.

“Maintaining a reserve is a prudent practice in most provinces, including (British Columbia) and Ontario, and does not add to Alberta’s net debt.”

Ceci said the spending plans for the next two years must still be approved by the legislature.

Giving the borrowing authorization over a longer period of time, rather than on a year-to-year basis, gives the government opportunities to find better deals, said Ceci.

The NDP cabinet also approved an order-in-council removing restrictions on the use of foreign currencies in short-term borrowing.

Berezowsky said the change was made because there are good opportunities in foreign markets.

He said the borrowing is hedged against Canadian dollars to ensure there is no risk from foreign currency fluctuations.

In its recently released mid-year financial report, the NDP government projected it would borrow $3.2 billion less than projected in the budget for capital and operating costs, though it is still borrowing $9.3 billion for the fiscal year.

That borrowing, and total debt projected to sit at $71.1 billion by the end of 2019-20, has prompted fierce criticism from opposition parties.

In a news release, the Liberals said the latest orders-in-council — released Thursday just before the holidays — shows the cynicism of the government.

“This is extremely disrespectful to taxpayers,” said Liberal Leader David Khan.