The NWT government is still in talks with Ottawa to increase its federally imposed borrowing limit above $1.8 billion, a request it first made last fall.
In October, finance minister Caroline Wawzonek said “multiple challenges” – the likes of wildfires and low water levels – had required hundreds of millions of dollars in extra spending.
“Requesting a borrowing limit increase is necessary to ensure we have the capacity to respond to expenditure shocks that have become more frequent,” Wawzonek said at the time.
The federal government controls the amount of money the GNWT can borrow. The cap has been set at $1.8 billion since 2020, when it was increased from $1.3 billion.
On Wednesday, the territory’s Department of Finance told Cabin Radio its latest request for an increase has yet to be approved.
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While the territory’s total debt remains within the existing limit for the time being, the GNWT acknowledged it is currently breaking its own fiscal responsibility policy by coming within $120 million of the limit. That outcome had been anticipated for some time.
The policy contains that rule to ensure the GNWT doesn’t end up pushed to the brink of its debt limit with no further wriggle room in an emergency. As the territory put in on Wednesday, that cushion “acts as an indicator to take action to ensure there is sufficient fiscal capacity to respond to further fiscal shocks.”
The territory said it remained compliant with other parts of its fiscal responsibility policy.
Asked about any measures being taken to limit extra spending, a Department of Finance spokesperson said the GNWT was “aligning spending as closely as possible with budgets approved by the Legislative Assembly” but declined to discuss departments’ actions in detail.
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“As the GNWT nears the end of its fiscal year, it is common to review year-to-date spending and budget availability. This may include temporary measures such as limiting hiring, restricting staff travel, or delaying procurement activities,” the spokesperson stated.
This week, one contractor – requesting anonymity to discuss the details of an agreement with the GNWT – said they had been told some work due for completion in the 2024-25 financial year was now being deferred until 2025-26.
In broad terms, the Department of Finance spokesperson said, the GNWT “continues to look for opportunities to decrease expenditures and increase revenues in order to increase fiscal capacity.”
Parliament is currently prorogued, meaning many key aspects of federal governance are frozen until at least mid-March once the Liberal leadership contest concludes.
However, the GNWT said it did not expect the prorogation of Parliament to affect its ability to secure a higher debt ceiling.
The 2020 increase to the territory’s debt limit was carried out through an order in council, a mechanism involving the governor general that isn’t expected to be affected by prorogation.
