N.L. hikes borrowing capacity, looks to long-term loans

The Newfoundland and Labrador government has secured a total of $1.4 billion in long-term financing since January, Premier Dwight Ball toldthe House of Assembly Thursday.

Previously, Ball had said he wasn't sure if the province would be able to borrow longterm, because of the current economic situation.

Ball told reporters Thursdayhis strategy is to move away from short-term borrowing.

To help do that, theprovince israising its borrowing capacity this fiscal year and next.

Ball saidlong-term borrowing is the preferred option "because you know what the interest rates are and there's less risk in the market."

Finance MinisterCathy Bennettsaid interest rates onlong-term loanswould range from 3 per centto 3.8 per cent.

Their length could vary. "They could be fiveyears, they could be 10years and they can be 30years," Ball said.

"[That]would all be part of the discussionthat you have and of course [the term length is]what impacts the interest rates."

Opposition reacts

Tory finance criticKeith Hutchings said the Liberals have been delivering "mixed messages" about the province's finances. He was surprised by the announcement Thursday.

"We're about two weeks away from the end of the [fiscal]year and that's brought on us today," he said."Very surprised that it would come at this date."

During question period, the Progressive Conservatives also asked aboutwhat an increasedborrowing capacity would do to the province's credit rating.

"If that wasn't part of our thinking, if that wasn't part of our mindset, well then,we would not be doing thedue diligence," Ball said in an interview after the house let out.

"Anytime you're into a borrowing position, anytime you're into the economic situation that we face as a province, you're concerned about all of those things."

The numbers

The province's borrowing capacity was previously capped at $2 billion for the just-ending 2015-16 fiscalyear. Now, with the introduction of a new bill,that number has increased to $2.4 billion,according to Bennett.

Thecap for 2016-17 will be contained in another new bill, Bill 10,which has yet to be published on the House of Assembly website.

The number that is published will just be the "first amount," according toBennett.

She said"it won't include all the borrowing we expect we may need to do for '16/17."

"We're trying to be responsible and be very careful in how much we ask the legislature to approve," she said.

With $1.4 billion in long-term funding secured, Ball saidthe province's short-term treasury bill debt is down to $1.77 billion from$2.7 billion.

He also said short-term loans would always be part of his"cash management plan."

All of the province's current loans are from domestic markets but Bennett saidsome long-term money may come fromglobal markets.

The the province's exact fiscal situation will be outlined in the next budget.

The date of thebudget has not yet been announced.