Ottawa has increased the NWT government’s federally imposed borrowing limit from $1.8 billion to $3.1 billion, the territory said on Monday.
The territorial government had been sailing uncomfortably close to its previous $`1.8-billion limit.
The territory was expected to come within $4 million of the $1.8-billion limit this financial year in terms of overall authorized borrowing, although that isn’t quite the same figure as actual debt.
Staff at various government departments have described hiring freezes, delayed payments and other measures to try to limit spending in recent weeks.
The GNWT had requested an increase to its federal debt cap in October last year.
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On Monday, the territory said Ottawa’s granting of that request “strengthens the GNWT’s ability to respond to expenditure shocks, such as effects of extreme weather events like floods and wildfires, and address implications of potential US tariffs on the Northwest Territories’ economy.”
US President Donald Trump said on Monday that 25-percent tariffs on Canadian goods and services would go ahead on Tuesday – a plan that has bewildered economists on both sides of the border, including those in the NWT.
Tariffs are likely to have more of a direct impact on provinces that share a land border with the US, but a trade war is still expected to have substantial indirect effects on the North.
The new debt cap represents a 72-percent increase on the old one, which had been in place since 2020. (It was $1.3 billion prior to 2020.)
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“The increase also ensures that the GNWT has the fiscal capacity and flexibility to continue to support economic growth through much-needed investments in infrastructure,” the territory stated.
The GNWT said it remains committed to “responsible borrowing guidelines” designed to ensure long-term debt is used only for major infrastructure investments.
The territory said its present debt level “remains affordable” in that debt servicing payments are less than five percent of total revenue, while its credit ratings remain high.
