The Alberta government has authorized Finance Minister Travis Toews to borrow up to $25 billion.
The sum is nearly four times the amount the government expected to borrow this year when it approved its 2020-21 budget in March.
“We expect the province’s deficit to be significantly larger due to reduced revenues and additional COVID-19 related spending,” Toews’ press secretary, Jerrica Goodwin, said in a Thursday email.
Although Toews may not need to borrow the full amount, he wants to be prepared, given the volatile economic conditions caused by the coronavirus pandemic and an oil price war, Goodwin said.
Last month, to vociferous protest from the Opposition, the United Conservative Party government approved a $57-billion budget based on financial projections it knew were outdated.
It calculated oil royalties based on a West Texas Intermediate (WTI) oil price of $58 US a barrel. Earlier this week, the price of benchmark WTI oil fell into negative values for the first time in history, thanks to the coronavirus pandemic and the global oil price scuffle.
The premier has previously said the government expects Alberta’s deficit this year to be at least triple the $6.8 billion forecast in the provincial budget.
Goodwin did not specify on Thursday about how the government intends to spend additional borrowed money. It’s destined for government programs, services and the COVID-19 response, she said.
Borrowing limits can stretch across multiple fiscal years, she said.
Analysts with the Fraser Institute projected Thursday the province’s relatively low debt-to-GDP ratio is likely to skyrocket as borrowing rises and the economy shrinks. The measure helps gauge how easily the province can pay off debt.
NDP has 12-item wish list
Opposition finance critic Shannon Phillips said the government borrowing is understandable, given the unprecedented economic challenges facing the province.
She wants more detail from the government on how and when it plans to use the borrowed money.
“We need broad-based relief measures across the economy, whether it’s in health care, education, training, post-secondary, small business support (and) rental supports to keep the economy moving forward,” Phillips said in a Thursday interview. “It’s the essential role of government right now.”
The NDP released a list Thursday of 12 ways it thinks the government should spend the borrowed money. The wish list includes extending a ban on evictions into the summer and financial support for Alberta landlords. Small businesses should receive commercial rent subsidies, too.
The province should reopen applications for emergency isolation support payments — a temporary relief program that came under fire when applicants hit technical and identification snags.
Health-care workers deserve a higher wage top-up during the pandemic, Phillips said. Earlier this week, the government said it would top up health-care aide wages by $2 an hour and recruit more workers for continuing care homes. Many assisted living facilities and long-term care homes have been hard hit by COVID-19.
Goodwin said the government has launched numerous programs and payment deferrals for people and businesses to help them endure the pandemic’s economic punch. They include a $500-million boost to health spending, expanded homeless shelters, funds for social service agencies, property tax and utility bill payment deferrals and a ban on evictions for non-payment of rent in the month of April.
During its four years in power, the former NDP government gave its finance minister permission to borrow up to $68 billion. Phillips said the NDP ultimately borrowed about $50 billion for provincial spending, about 43 per cent of which paid for construction of schools, hospitals, roads and bridges.
With borrowing cheap at the time, Phillips said the government also borrowed $5 billion cash each year to have on hand for emergencies. It’s a strategy the UCP government should consider, she said.