The Northwest Territories says it has asked to increase its federally imposed borrowing limit above $1.8 billion because efforts to restore financial balance have been destroyed by “multiple challenges.”
On Friday, finance minister Caroline Wawzonek projected the GNWT will come within $60 million of that limit in the coming months, which breaks the territory’s fiscal responsibility policy.
“We are, therefore, in the process of requesting a borrowing limit increase from the Government of Canada,” Wawzonek said.
Ottawa has the final say on the territory’s ability to borrow. The cap has been set at $1.8 billion since 2020, when it was increased from $1.3 billion.
Last year’s wildfire season and this year’s low water levels sucked up huge sums that the territory would otherwise have tried to save. Depending on how you assess them, each of those issues is worth $100 million or more in extra spending.
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The Sahtu’s fuel cost crisis is the latest example of a fresh financial pressure on the GNWT.
In February, Wawzonek and Premier RJ Simpson launched a plan to find $150 million annually through savings or new revenues. On Friday, she said some progress had been made – but not enough.
“Requesting a borrowing limit increase is necessary to ensure we have the capacity to respond to expenditure shocks that have become more frequent,” said Wawzonek in the legislature.
“However, seeking this flexibility in our borrowing room does not mean that we can ease off on our own efforts to ensure fiscal responsibility and sustainability.
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“We will continue to evaluate the value of all programs and services, keep a close eye on public sector growth, and find innovative ways to achieve efficiencies.”
The GNWT’s budget had projected a $294-million operating surplus this year. On Friday, Wawzonek said that is now expected to be just $67 million.
That surplus doesn’t just sit there – it is used to fund infrastructure, and a lower surplus means more borrowing must take place to pay for the same projects.
Trying to end Friday’s update on a high note, Wawzonek pointed to investments in mining and defence over broader time periods as examples of areas where the NWT’s economy can be expected to benefit.
“Even in the face of these challenges, I remain optimistic when looking at the long-term potential of the Northwest Territories economy,” she said, “and our ability to restore balance to the GNWT’s fiscal health.”
