Government Finances Archives - Page 10 of 11

Heritage Fund loses lustre- Time to rethink its existence-Analysis and Opinion

14Jul

By Bob AscahNo Comments

Agencies, Government Finances, Opinion/Research

Heritage Fund loses lustre- Time to rethink its existence-Analysis and Opinion

The Alberta Heritage Savings Trust Fund (AHSTF), established by Peter Lougheed in 1976, has been seen as a Crown jewel of Alberta’s fiscal management. Recently, the AHSTF long viewed by rating agencies as a vehicle to stabilize finances, has begun to lose its lustre. Is the Heritage Fund merely a relic of Alberta’s golden day in the sun when money poured into provincial coffers? Should the AHSTF be eliminated given the rise of Alberta’s debt. How does the reporting on the AHSTF’s management obscure what should be a laser focus on debt management? (more…)

1Jul

By Bob Ascah1 Comment

Credit Ratings, Government Finances

The next downgrade

On 30 June FitchRatings downgraded the provincial rating from AA to AA- and revised its ratings outlook on long-term debt to negative from stable. Although there was nothing surprising about the downgrade, in view of the Province's deteriorating fiscal position, several statements are noteworthy. First, the report came one day after the Alberta Economic Recovery Plan was announced, Fitch remarked there was a lack of updated financial information. Fitch's initial timing of the report may have been dictated by the expectation that audited financial statements for the last fiscal year would be available. This turned out not to be the case as the Government amended the Fiscal Planning and Transparency Act to give the Government until the end of August to complete the financial statements....

“A National Energy Program”- Hyndman papers

17May

By Bob AscahNo Comments

Energy, Energy, Government Finances, Intergovernmental

“A National Energy Program”- Hyndman papers

The Provincial Archives of Alberta slumbers in obscurity, but the work of its archivists is essential to the conservation and preservation of Alberta's rich social and political history. Lou Hyndman served with Peter Lougheed's ministry from 1971 to 1985 when he returned to the private sector. Hyndman served in many key cabinet positions, including Education, Intergovernmental Affairs, and Treasury. He donated over 100 boxes of records from his time in the provincial government. In this extract, the Deputy Minister of Energy- Energy Resources, Dr. Barry Mellon advises his minister, the Honourable Merv Leitch about impending storm clouds circling over Alberta's energy sector. This revealing memorandum was written six months after Pierre Trudeau won a majority election on 18 Febru...

24Apr

By Bob AscahNo Comments

Banks, Financial Institutions, Government Finances, Opinion/Research

“A Distrust of Everything”- Opinion

In 1982, I interviewed Nigel Gunn, who at that time was the Honorary Chairman of Bell Gouinlock, a well- respected boutique investment dealer specializing in municipal debt. My dissertation (Politics and Public Debt) is about federal public debt management from the 1920s to the 1950s. The one critical point Gunn made in the interview that I will never forget was his statement that when the United Kingdom Treasury abandoned gold in September 1931, "this lead to a distrust of everything." A similar phrase was heard during the 2007-2009 financial crisis, but with Ben Bernanke to the rescue- a student of history- the finger was put in the dike. Here we are again at another financial reckoning. At the present time, our Bank of Canada is following a conventional, yet extraordinary pat...

Reset for federal-provincial-municipal fiscal arrangements? Opinion

17Apr

By Bob AscahNo Comments

Credit Ratings, Fiscal History, Government Finances, Intergovernmental, Opinion/Research

Reset for federal-provincial-municipal fiscal arrangements? Opinion

It is cliché to say we are living in extraordinary times. Comparisons with the Global Financial Crisis doesn’t work, although monetary madness is again afoot. For Alberta, there are comparisons with the 1980s when homes were sold for a dollar, allowing mortgagors to walk away. And of course, there is the Great Depression, which devastated all of Canada and left lasting resonance on how people related to others, to governments, and to money. So now, we are in a time of both crisis and reflection. Should governments (national and sub-national) be co-operating or competing? We know the beggar thy neighbour policies of the Great Depression did not work, but our next-door neighbour seems intent to draw up the bridges on the castle. In Canada, we are in in a period of inter-governmental co-oper...

Keystone-XL, the Alberta Petroleum Marketing Commission and the Borrowers

9Apr

By Bob AscahNo Comments

Agencies, Credit Ratings, Energy, Energy, Government Finances, Opinion/Research

Keystone-XL, the Alberta Petroleum Marketing Commission and the Borrowers

At the end of March, the Alberta cabinet passed Order in Council 104/2020 which authorized the “President of Treasury Board and Minister of Finance to make advances to or purchase securities of the Alberta Petroleum Marketing Commission.” In addition, the Minister was given the authority to raise: “up to $2 000 000 000, by the issue and sale from time to time of notes, bonds, debentures or interest-bearing or non-interest-bearing treasury bills issued by the Crown in right of Alberta or any other securities under which the Crown in right of Alberta is the debtor (collectively referred to hereafter as “Government securities”) for the purpose of making advances to or purchasing securities of the Alberta Petroleum Marketing Commission in respect of the development of a...

3Apr

By Bob AscahNo Comments

Agencies, Energy, Government Finances, Opinion/Research, Politics

Politics of Alberta Growth Mandate (AGM)

Politics of the Alberta Growth Mandate In past articles, the Alberta Growth Mandate was explained as a significant policy initiative in the first NDP budget of October 2015. It should be noted that, in the fall of 2015, Alberta was reeling from significant declines in investment and job losses, and a rookie NDP government was looking for quick wins to support jobs in the Alberta economy. The policy objective was to support Alberta companies (as defined by the Alberta Investment Management Corporation (AIMCo)) and based on meeting one of the following criteria. a. Creates jobs in Alberta b. Builds new infrastructure in Alberta c. Diversifies Alberta’s economy d. Supports Alberta’s growth e. Connects Alberta’s companies to export markets f. Develops subject matter expert...

30Mar

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Intergovernmental

Government Borrowing

Updated 2 April 2020 A number of historic events have taken place this past week, with long-term ramifications for the Canadian and Alberta economies. Bank of Canada actions to purchase money market paper of provincial governmentsBank of Canada starts quantitative easing and will purchase commercial paperManitoba Premier calling on the federal government to establish a Pandemic Emergency Credit FacilityProvince of Alberta issues a century bond Alberta is witnessing the deepest economic storm since the mid-1980s and likely will see conditions similar to the Great Depression over the next few months. Unlike the Great Depression, our social safety net and government willingness to “do whatever it takes” will moderate the financial and economic distress. Unlike the Great Depression, ...

Alberta ‘Growth’ Mandate- Analysis and Opinion

22Mar

By Bob AscahNo Comments

Agencies, Budget, Government Finances, Opinion/Research, Politics

Alberta ‘Growth’ Mandate- Analysis and Opinion

While now is not necessarily the best time to be taking stock of one's investment portfolio, government and provincial agency officials, who face a March 31 fiscal year end deadline, are concerned about the impact of accounting rules that require "fair market accounting" for their investments. The performance of both bond and equity markets over the next ten days will determine whether forecasts for investment income in the provincial budget ($1.96 billion for the Heritage Fund) will actually pan out. Investment income for investment portfolios are typically composed of two types of income: (1) dividends and interest payments or cash distributions from private equity, and (2) increases or decreases of the "fair value" of the investment at year -end compared to the initial cost of buy...

22Mar

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Opinion/Research, Opinion/Research

Budget 2020-Credit Perspective

[Updated 23 August 2020. Note: This report was in development before the DBRS Morningstar report of Thursday 19 March. The report is only available to purchasers of the service. Normally, the Province of Alberta posts on its Investor Relations page the reports. To date, this has not taken place. Nor has there been an official reaction to the downgrade to AA- from AA and the outlook to negative.] One of the key audiences of any government budget, but especially a budget under increasing duress and scrutiny, are credit rating agencies such as Moody’s, Standard & Poor’s and DBRS Morningstar. Credit evaluation is as much an art as a science, requiring an understanding of financial principles, economics and political science. Agencies provide opinions on probabilities of default of b...