Last month, the provincial government updated their Term Debt Issues document, which lists all the term debt they still have outstanding.
It’s been over 3 months since I last wrote about the Alberta government’s term debt, so I thought I’d write this brief update. This time, however, I thought I’d summarize the new debt taken out in 2021.
|# of debts||Total debt|
Some of these are fairly short-term debts, maturing as early as June 2024. Others are further along. The four $600 million loans taken out in March, June, and August, for example, mature in about 30 years.
Missing from the report is the purpose of the debt. Prior versions had the purpose listed as “government” or “on-lending”; although there was one from 2010 that was labelled “TPP liabilities”.
The interest rates on these 3 debts range from 1.65% to 3.225%. However, the effective cost of debt (or the interest rate after tax deductions) ranges from 0.870% to 3.90%.
This new $9.311 billion brings the total term debt traded by the provincial government since the UCP were elected to $$38.5 billion, spread out over 81 transactions.
The new debt borrowed during 2021 has pushed the total amount of term debt owned by the Alberta government over $100 billion, to $102.7 billion. More than a third of that total debt (37.5%) has been issued since the UCP were elected nearly 3 years ago. A little less than half of it (48.36%) was issued during the NDP administration.
The remaining 14% or so was issued under the PC government, dating back to 2002.
Keep in mind, however, that it took the NDP 4 years to rack up $49.72 billion in debt. The UCP have accumulated nearly $39 billion in about 2.5 years. That gives the NDP an average of $12.43 billion a year, and the UCP an average of $14.93 billion a year, an increase of 20.1%.
At this rate, the UCP will have borrowed a total of $59.7 billion during their 4-year term, which will be 20.1% more than the NDP borrowed during their 4-year term.
By the 2023 election, provincial debt could total as much as $123.8 billion, and the UCP portion would make up 48.2% of it, assuming they keep borrowing at this rate. That’s including subtracting the two debts that mature before then.
Now, that being said, the UCP government didn’t borrow in October, November, or December, following 5 months straight of borrowing. So, they may not end up borrowing that much over the next year or so.
Either way, here’s how the debts look like broken down by month during the UCP’s term:
And by budget year.
Obviously, the pandemic had a lot to do with this. Their 4 highest months were during the first 5 months of the pandemic, totalling $17.4 billion.
The next largest month, was 6 months before the pandemic, however: September 2019 saw the UCP issuing $3 billion in term debts. Two months later, they issued $2.25 billion, making November 2019 the 7th highest month.
In fact, before the pandemic, the UCP had already borrowed nearly $7 billion in term debts. So, for every $5 in term debt the UCP has issued since taking power, $1 of it was issued before the pandemic.