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Moody’s warns British Columbia not to ‘impair’ finances permanently Add to ...

These are stories Report on Business is following Tuesday, Sept. 17, 2013.

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Moody's warns B.C.
Moody’s Investors Service today urged British Columbia to stand firm on its “resolve and discipline” where the finances of Canada’s westernmost province are concerned.

In its annual report on the province, which it rates triple-A with a negative outlook, the U.S. agency said the province has “sufficient flexibility” to absorb the latest increases in its debt juggling act.

“Due to the significant debt reduction achieved by the province over the last decade, the province faced the recent downturn with improved fiscal flexibility and has been able to absorb the recorded and anticipated increases in debt burden,” Moody’s said in its report.

“With cash financing requirements expected over the next three years, the province’s debt burden is expected to increase moderately to roughly 98 per cent of revenues in 2015-16.”

British Columbia’s deficit was $1.1-billion for the 2012-2013 fiscal year as sagging natural gas prices and production hit revenues.

But the province still pledges to balance the books in the 2013-14 fiscal year, with a small surplus of $154-million, followed by a jump to $446-million a year later.

"British Columbia has a strong track record of meeting budget targets and will need to maintain this resolve and discipline to ensure that deficits arising from the recent economic downturn remain temporary and do not impair the province's finances on a permanent basis," said Jennifer Wong, the lead Moody’s analyst on the province.

Separately, in a new forecast today, Royal Bank of Canada projected economic growth would slow in British Columbia this year to 1.5 per cent., rebounding in 2014 to 2.7 per cent.

Barrick shares in spotlight
Shares of Barrick Gold Corp. rose slightly today amid reports that investors are ramping up the pressure for change.

These shareholders, based in Europe, plan to write the gold giant’s board, seeking to speed up the transfer of power from co-chairman Peter Munk, according to The Wall Street Journal.

As The Globe and Mail’s Jacqueline Nelson reports, investors have been unhappy with Barrick, leading to a dispute earlier this year over the large compensation to co-chairman John Thornton.

At the same time, a U.S. activist hedge fund has also contacted U.S. shareholders in a campaign to change the Barrick board.

Microsoft hikes dividend
Microsoft Corp. today hiked its quarterly dividend by a nickel to 28 cents (U.S.) a share.

The software giant also announced a share buyback program of up to $40-billion, similar to the repurchase scheme that was set to expire at the end of this month.

Keystone lobbying worth millions
The Keystone XL oil pipeline may show no signs of going anywhere at this point, but the lobbying effort behind it has become an industry of its own.

According to data compiled by Bloomberg, there are now lobbyists for more 54 interested groups. Almost $16-million (U.S.) was pumped into advertising in the 2012 election, and more than $1-million has been put into TV advertising so far this year.

Tom Steyer, the founder of the Farallon hedge fund, is committing $1-million on his own to a campaign launched the Sunday before last to oppose TransCanada Corp.’s controversial project, which would carry Alberta oil to the U.S. Gulf Coast.

Those in favour of the pipeline, such as U.S. producers, are also spending big time.

This battle will mark its fifth anniversary on Thursday, based on when TransCanada first applied for U.S. approval.

Since then, Keystone has become a battleground for environmentalists and others. The administration has already TransCanada once, forcing the Canadian giant to reroute the proposed pipeline and ask again for approval.

President Barack Obama has yet to decide.

According to Bloomberg, the lobbyists are putting their efforts on a “small group” of officials at the U.S. State Department.

“It’s the equivalent of old banking legislation that sent some lobbyists’ kids to private school for 10 years, and then to college for four more,” Burdett Loomis, a University of Kansas political science professor, told the news agency. “It was the ‘Lobbyist Support Act.’”

Markets mixed
Asian and European stocks slipped today, settling down after yesterday’s rally and in advance of the Federal Reserve’s key policy announcement yesterday. North American stocks, though, were up in early trading.

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