The Manitoba government is again calling on the federal government to act as an intermediary for provinces to borrow money, in order to reduce the economic impact from the COVID-19 pandemic.
Premier Brian Pallister proposed the concept on March 26, and it has since been supported by all premiers in a letter to Prime Minister Justin Trudeau, Pallister said at a news conference Monday.
“Every province is in the same situation,” he said.
“Every province is going to be looking for money at the same time, and that’s going to drive up our costs even further.”
The premier was upfront about the economic situation currently facing the province, saying Manitoba is most indebted province per capita, and that the province’s $800-million rainy-day fund will dry up.
Pallister had said that the rainy-day fund could run out by the end of June. On Monday, he said that timeline “hasn’t changed significantly at this point,” but he did not go as far as confirming that date as an absolute.
The premier also did not give a specific amount of money in terms of how much is left in the rainy-day fund when asked by a reporter.
WATCH | Pallister lays out bleak money problem caused by COVID-19 pandemic
The Manitoba government predicts it will need to borrow as much as $10 billion this year: $5.6 billion for what is already in the budget, and another $4.4 billion in new borrowing to respond to the COVID-19 pandemic.
“Borrowing more money from Manitoba’s future, from our own future, and from those generations that follow us is frankly the only way we are going to get the money we need right now,” Pallister said.
“That’s where we’re at. Let’s be honest about it.”
The cheaper interest rate that the federal government could obtain could result in saving as much as $150 million — or 1.5 per cent — of what Manitoba needs to borrow this year, the provincial government says.
“The government doesn’t print its own money. There’s not a tree in the back of the legislative grounds here that pops out money every spring or fall. The reality is that people pay taxes and that money comes from our economy,” Pallister said.
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“Really, the choice is about whether you want us to pay more and have stronger banks, or whether you want us to pay less and have stronger health-care delivery.”
Pallister and Trudeau discussed the emergency credit agency “as recently as Friday, but not since,” the premier said.
The prime minister, deputy prime minister Chrystia Freeland and federal finance minister Bill Morneau are in regular contact with provincial premiers and finance ministers, said Maéva Proteau, spokesperson for Morneau.
On March 27, a day after Pallister pitched his lending idea, Bank of Canada governor Stephen Poloz balked at the program because liquidity — the amount of money readily available — is low right now, which is the real issue.
The central bank is instead buying provincial securities, which Poloz believes will be more effective in stabilizing the amount of provincial cash. The bank started purchasing bonds at a rate of 40 per cent, though that could fluctuate depending on market conditions, he said.
“That’s working well, it’s already had an impact on some of the spreads … so that should ease those financing constraints for the provinces, and at least give them predictably for their near-term cashflows,” Poloz said at the March 27 news conference.
Poloz noted that the central bank sees the financial troubles related to COVID-19 as a short term problem, but it will adjust its strategy if problems persist last longer than predicted, or they become more severe.
Meanwhile, back in Manitoba, the opposition NDP are speaking out against the Pallister government for not implementing more social aid.
“It’s been 17 days since a state of emergency was declared in Manitoba — families are stressed, people are losing their jobs, and businesses are scrambling to stay afloat. Yet the Premier has so far failed to announce a single, direct support that would help families pay for child care, pay rent, provide support for business or replace income for unemployed workers,” party leader Wab Kinew said in a statement.
“It’s time the premier start focusing on what matters.”
Public health officials said Monday they have identified 204 total confirmed and probable cases of COVID-19 in Manitoba.
There are 11 people in hospital — seven in intensive care — and two people have died from the virus.
Public health officials said 17 people have recovered from the novel coronavirus that causes COVID-19, but would not say whether those patients required hospital care
WATCH | Manitoba Premier Brian Pallister talks about COVID-19 measures on April 6:
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