EDMONTON, AB: The Bank of Canada’s decision to hike the key interest rate by 0.25 per cent will cost taxpayers big time with ballooning interest payments as the NDP government plunges Alberta deeper into debt, the Wildrose Official Opposition said.
The NDP government’s 2017 Fiscal Plan stated that “rates will eventually rise, posing a risk for indebted households, consumer spending and the government as substantial borrowing is planned, and higher rates makes borrowing or refinancing of debt more expensive.” The 0.25 per cent increase in the key rate coupled with downgraded credit ratings will mean an increase in debt servicing costs and an additional burden on everyday Albertans. For every percent increase in borrowing rates, the Alberta government projects a $230 million hit to its bottom line in fiscal year 2017-18.
“The increase in the key interest rate will shine a spotlight on the irresponsible nature of NDP government borrowing in our province,” Wildrose Leader Brian Jean said. “The last thing Albertans want is to spend more money to finance the ever-increasing debt load the NDP government is saddling our province with, but here we are. This will mean even less money going to the hospitals, schools, and roads that tax dollars should go towards.”
The Bank of Montreal and the Bank of Nova Scotia both predict that the next rate hike will happen in October, putting further pressure on the NDP government to get their fiscal house in order.
“As the economy rebounds, we should anticipate more rate hikes in the future,” Wildrose Shadow Finance Minister Derek Fildebrandt said. “Each hike has million, if not billion dollar implications for our province, and the prudent thing for this NDP government to do is to get our province on a path to balance immediately.”