WINNIPEG -- Manitoba’s premier is calling on the federal government to act as the intermediary and borrow funds on behalf of provincial governments and then loan it to them.
Premier Brian Pallister said on Monday morning during a news conference that Ottawa should coordinate the national emergency response.
“They can borrow at much lower rates, they can pass those savings on as a service to team Canada,” he said.
Pallister suggested the federal government create a standing credit mechanism on an urgent basis. This mechanism would borrow on province’s behalf and then lend it back to them on the same terms.
The province noted that Ottawa is able to borrow from international financial markets at a lower interest rate compared to individual provinces through the Bank of Canada.
According to the province, Pallister has received support from all other premiers in a letter to Prime Minister Justin Trudeau.
“The COVID-19 pandemic has shut down Canada’s economy,” Pallister said, noting that governments are struggling to find money from other sources.
Pallister said this plan could save Manitobans in excess of $1 billion in the next ten years.
“This federal emergency reserve savings team concept would be the first of its kind in Canadian history,” he said. “A common sense, friendly Manitoba suggestion. Lower interest payments mean more money for healthcare, now and in the future and a lower burden on future generations too."
Pallister referred to the choice as simple: stronger banks or stronger healthcare.
“I know Manitobans agree. I know experts agree. I know all the premiers agree too,” he said. “I know the choice is clear to all of us.”
The premier said a federal emergency savings team would be good for the entire country, for all of and for future generations, noting “we are all in this together. The province’s and the federal government.”
According to the province, the COVID-19 pandemic has undermined essential borrowing capacity in many parts of Canada. Provinces can only access limited credit and at much higher rates than the federal government, which means billions will be spent on debt servicing.
“The COVID-19 pandemic has shut down Canada’s economy,” Pallister said.
The province said that in 2020 alone, Manitoba expects borrowing needs of up to $10 billion in order to support frontline healthcare and family expenses, fill in gaps created by revenue and bill deferrals and pay for ongoing government expenses.
“The federal government has been innovative and responsive in dealing with the fallout from COVID-19 on behalf of Canadians,” said Pallister in a statement.
“This is another, increasingly urgent way we can adopt a ‘Team Canada’ approach to fight this pandemic together, as we are doing right here in Manitoba with all our partners, to ensure we all come out of this pandemic stronger and more united than ever.”
