REGINA, SK: Another bond rating agency is harshly criticising the Manitoba’s skyrocketing debt as the Canadian Taxpayers Federation (CTF) continues to call on the provincial government to control spending. Bond rating agency DBRS did not follow Moody’s move to immediately downgrade Manitoba’s credit, but raised serious concerns about the province’s finances.
“The Manitoba government says it’s fine to spend millions more than it has, but it isn’t fooling the experts and it certainly isn’t fooling taxpayers,” said Todd MacKay, Prairie Director for the CTF. “When lenders get worried, they increase interest rates and Manitoba is already spending about $842 million on interest payments.”
Credit ratings from bond rating agencies are similar to personal credit scores. When a family amasses too much credit card debt their credit score is likely to suffer and they face higher interest rates when their mortgage is renegotiated. The same is true for governments.
DBRS didn’t immediately lower Manitoba’s credit rating due to the lower dollar’s positive impact on exports and the province’s limited exposure to plunging energy prices. However, the DBRS analysis of Manitoba’s financial management is unequivocal.
“Weak fiscal discipline has led to further delays in the Province’s anticipated fiscal recovery timeline,” states the DBRS press release.
According to DBRS analysis, Manitoba’s situation is dramatically worse than government is reporting.
Last year, the government reported a deficit of $424 million, but when DBRS added in capital expenditures to complete the financial picture, the actual shortfall ballooned to $1.3 billion. The projection for this year is just as bad with a government-projected deficit of $422 million likely soaring to $1.1 billion, according to DBRS.
“This debt is forcing Manitobans to spend million on interest now and it will force our kids and grandkids to make payments on this debt for decades to come,” said MacKay. “DBRS makes it clear Manitoba can turn this situation around if we act soon, but continuing on this path is completely irresponsible.”
Todd MacKay, Prairie Director
