Auditor General cautions province over future economic outlook despite no immediate default risk15 December 2015
FREDERICTON (GNB) – Auditor General Kim MacPherson highlighted the need to return to balanced budgets and control the growth in net debt in her report tabled today in the legislative assembly.
For the year ended March 31, 2015 the province reported its seventh consecutive deficit. With net debt of more than $12 billion, there are no long-term targets in place to curtail or reduce net debt.
New Brunswick’s credit rating remains stable. However, the report shows this province’s public-debt-to-GDP ratio is outpacing the “all provinces” average. The auditor general found there is no immediate risk of default on the Province of New Brunswick’s debt, but cautions the province is more vulnerable given its current weak economy, high unemployment and an aging population.
“While there is no immediate risk of default, now is the time to prepare for the future and address the province’s financial challenges,” said MacPherson.
In addition, the province at present lacks a comprehensive long-term infrastructure plan. While progress has been made to start such a plan, it will be challenging to ensure the ongoing sustainability and safety of the province’s highways, hospitals, schools, bridges and other essential infrastructure while respecting the fiscal challenges of managing net debt growth.
MacPherson made a number of recommendations to the Department of Finance regarding the management of public debt, transparency and reporting, including:
- developing a comprehensive debt management strategy and having it approved by cabinet;
- establishing the province’s risk tolerance;
- publicly reporting government’s debt management objectives, guidelines and strategies; and
- providing the public with information on projected future performance of the province’s debt portfolio.
The chapter on the province’s financial position can be found in Volume III of the 2015 Auditor General Report. Volume III focuses on matters arising from the annual financial audit of the province and Crown agencies. Volume IV, also released today, reports new performance audits completed in 2015. In Volume IV, Public Debt is found in chapter 2 and comments regarding infrastructure are found in chapters 1 and 4. These volumes and one page summaries for select chapters are available online.