A skinnier surplus and tightened belts will allow B.C. to balance its budget despite lower than expected economic growth, Finance Minister Michael de Jong said Thursday.
But total provincial debt continues to climb, piling up by nearly $14-billion over the next three years.
British Columbia’s debt is forecast to hit $62.6-billion in the year ending March 31, 2014, according to a June budget update.
That is up $6.4-billion from an expected $55.8-billion the previous year.
Debt is forecast to increase again in the fiscal year ending March 2015, to 66.7-billion. And in the next year, provincial debt is forecast to climb by another $3.1-billion to $69.8-billion.
Debt is going up even as the government projects a balanced budget because a large chunk of capital expenditures are not included in the budget.
Provincial debt has been marching upward for much of the past decade and Premier Christy Clark made debt reduction a key theme of her recent winning election campaign. But the potential billion-dollar benefits of liquefied natural gas plants, if they are built as planned, will not be fully registered for years.
Asked whether it was premature to talk about B.C. becoming “debt-free,” Mr. de Jong said the province was thinking long-term.
“I don’t think it is premature to be setting a target by what we are seeking to achieve by building a new [LNG] industry,” Mr. de Jong said.
According to government projections, the rate of annual debt growth will decline from a peak of 12.1 per cent in the year ending March 2014, to 6.6 per cent in 2015 and drop further, to 4.5 per cent, in 2016.
The government has lowered its economic forecast to 1.4 per cent from 1.6 per cent in February and is calling on ministries to find $30-million in savings to reach a targeted surplus of $153-million, down from $197-million in the February budget.
B.C. is keeping a close eye on its debt-to-GDP ratio to maintain its Triple-A credit rating, Mr. de Jong said. The June update has that ratio peaking at 18.5 per cent in 2015.