Last week, the lieutenant governor of Alberta authorized the increasing of the maximum limit set on how much the Agriculture Financial Services Corporation is allowed to borrow.
The Agriculture Financial Services Corporation is a provincial crown corporation that provides Alberta farmers with crop insurance, livestock price insurance, farm loans, commercial loans, and farm income disaster assistance.
The new limit was recommended jointly to the lieutenant governor by Travis Toews, the finance minister, and Devin Dreeshen, the agriculture minister. It will raise the limit by nearly $800 million over the next 3 years.
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For the current fiscal year, the limit is increasing $267 million. Next year, it will rise by $267 million. In the third year, it will rise by another $266 million. By the end of the 3 years, the limit will be at $3.6 billion.
The previous limit was $2.8 billion, set in February 2020, and was an increase from the previous limit of $2.6 billion set in 2018. This means that since the UCP have taken power, by the next election, they will have increased AFSC borrowing limits by $1 billion.
The 2018 increase was the only limit increase implemented by the NDP during their first term. They increased the limit by $300 million, and it was the first increase in 6 years. The last limit set by the PC government was a half a billion dollar increase that party had just set the previous year.
So where does the AFSC get the money that it borrows? Does it just go to the local CIBC to borrow $3.6 billion?
Well, the same order that authorizes the AFSC to borrow up to $3.6 billion also authorizes Toews to “make advances to and purchase securities of AFSC”.
Which begs another question: where does Toews get the money he needs to make those advances or purchase those securities? The same order:
. . . authorizes the minister to raise money 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 for . . . making advances to or purchasing securities of AFSC
The limits on both how much Toews advances and how much he raises is equivalent to the limits for the AFSC to borrow each year.
Any advances, securities, or borrowings made to or by the AFSC can’t have a maturity date of more than 20 years beyond when they’re issued.