CALGARY- Alberta Finance Minister Doug Horner spent Friday in Calgary trying to drum up support for the province’s first balanced budget in six years.
The Alberta budget, released Thursday, details the Redford government’s long term plan to borrow billions of dollars to finance capital projects. That approach drew sharp criticism from opposition party leaders on Thursday.
But speaking at an annual post-budget address to the Calgary Chamber of Commerce, Horner said the province has a solid plan to repay what it borrows.
“We are going to set aside one tenth every year of what we borrowed in an account,” said Horner. “When the 10 years is up, the money is there to pay off that bond.”
By 2016, Alberta’s capital debt is expected to exceed $21 billion but is only paying three per cent interest on what it borrows. Some financial analysts say borrowing cheap money and repaying the debt later on makes sound financial sense.
“The government will very unlikely want to pay them back early because they are currently borrowing at very low interest rates,” says Jack Mintz, a public policy professor at the University of Calgary. “Likely, interest rates will go up in the future and so if the government wants to hold onto the bonds for a longer time before paying them back, they may want to do that because it’s a good financial decision to do that.”
At his address, Horner reminded Calgarians his government has a triple A credit rating, meaning it can borrow money at the lowest interest rates available.
with files from Gary Bobrovitz
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