IPG Says Budget -Measured Approach- to Economic Challenges

Tuesday, February 17, 2009 05:47 PM

Prince George, B.C.- The provincial budget released by the B.C. Government today reflects challenging global economic conditions. The provincial government will be going into deficit and the provincial debt to GDP ratio will rise, though not significantly.

"The Budget is a measured approach to managing the province’s finances in these challenging economic times", stated Tim McEwan, President and Chief Executive Officer, Initiatives Prince George Development Corporation. "We understand that government is faced with a tough balancing act to maintain hard-won improvements in provincial public finances", McEwan continued.

The province’s debt to GDP ratio – the main indicator of government’s overall fiscal health -- has declined over the past decade from a high of 21.3% in 2002/03 to 13.8 in 2008/09. The debt to GDP ratio will increase to 15.8% by 2011/12 to accommodate additional capital spending of $2.0 billion and an operating deficit of $495 million in fiscal year 2009/10 and $245 million in 2010/11. The increase in capital spending is expected to lever an additional $1.0 billion from the federal government.

"The size of the deficit over the next two years and the increase in the debt to GDP ratio is modest given the scope of the global economic crisis that we are facing ", McEwan noted. "Arguably, if the global financial crisis deepens, government has further room to move on northern priorities because of past fiscal prudence".

The Throne Speech delivered Monday outlined government commitments toward Northern British Columbia, including (among other items) accelerating the Cariboo Connector four-laning program, improvements to the Pine Pass and Highway 16, the Northwest and Northeast Transmission Lines, building a new Wood Innovation and Design Centre affiliated with UNBC, and a commitment to work with the federal government to expand the northern transportation hub at Prince George and the phase II expansion of the Port of Prince Rupert.

"We are hopeful that a portion of the $3.0 billion in leveraged provincial and federal capital spending will underwrite the spending commitments for the North the government outlined in yesterday’s Throne Speech", McEwan noted.

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