Our Total Debt Service Ratio is 10.9% for 2023-2024. If Nfld was a country, the Bonds would be given BB or speculative "junk" status. Only thing saving nfld from Junk status must be Canada guaranteeing some of the debt.
It's likely much higher than that. A couple of years ago, they changed the way they reported debt servicing costs in the cash -based version of the budget. I'd been showing that their DSR was heading towards the point in the upper teens and low 20s where provinces would normally be insolvent or as good as broke.
Thats higher than Sri Lanka, who defaulted in 2022 when they were around 15.8%. This is all any politician worth their salt should be talking about. Its the same as a spouse accumulating all kinds of debt and not bothering to disclose it to his/her spouse.
I will respectfully push back on behalf of the fourth estate, and the allegation that those questions weren't asked. They were, either to Coady (oil prices) or the officials in the tech briefing (discrepancy between debt and deficit). That doesn't mean we received answers that people will find satisfactory.
The answer to the debt question was essentially "we use 11 forecasters and this is the forecast. Oil is volatile."
The answer to how a $572-million deficit equates to a $1b rise in net debt, $2-billion rise in gross debt, and $4b in borrowing was probably not the full picture, but it was asked and we were told that it was in large part due to a desire for greater liquidity and to prepare to pay off upcoming bond maturities.
Again, that probably doesn't satisfy critics. But it's a lot to process in a couple of hours, and the questions did get asked.
If it was asked, it wasn't reported that I saw. I may have missed it.
The oil price reply as you've given it is laughable. Did anyone press as to how old the forecasts were?
The deficit point has nothing to do with either liquidity or net debt or refinancing in advance debt that matures in the future. It has to do with accounting and the need to understand how that affects what you report.
The issues I raised are not about being critical but about accurately reporting versus simply transcribing.
No argument here. The risk of this thing approaching a $1b deficit and our net debt crossing the $20b mark seems pretty high. I will be interested to see how the credit rating agencies respond.
The long-term employment projections (7.6% in 2028 and 5% in 2029) are even more pie in the sky. Pretty much every single thing that could break our way has to, and even then those kind of numbers seem unlikely for NL.
The news of the budget was how obviously and wildly out of date it was.
The second news thing flowing out of that was to ask why now, given everything that says don't do it. It's like the '21 election. Disconnected from reality.
All the budget messaging was as if nothing in the world changed yet everyone in the room including Coady talked about a world that was radically changed.
The chasm between those two things, the surreality of talking about a global trade war and delivering a steady as she goes budget wasn't worthy of comment from you, CBC, NTV, and VO or the Independent AFAIK or the Shoreline. The corporate comments (business, industry, union) were all taken out of the stock box.
The $200 million for trade war relief was radically out of step with where we are in the world. It's a rounding error on a $12 billion budget.
None of that got reported or commented on in any of the coverage of the budget. None of it. Maybe I missed it but I don't think so.
If they are borrowing $3.0 billion on a $12 billion budget (a 25% cash deficit) and your forecasts on oil, employment etc are all based on out-of-date optimistic estimates, and bond yields are climbing (and markets will be super tight) and oil prices are falling then liquidity - another big thing they brought up - is in serious doubt.
We've had serious liquidity issues twice in the past decade. Twice. The task time we had liquidity issues was 1929. The last time a Canadian province had liquidity issues was SK in 1989. That's a fundamental financial problem for anyone. Means you are in danger of not paying pay the bills, including payroll.
We had problems raising money in the 2015-2016 period triggered by Davis and the change in government. The next was the spring on 2020 *before* COVID.
Net debt doesn't matter. It's an assets/liabilities concept when the issue is cash flow. Forget that GNL keeps talking about it. Talk about gross liabilities, which went up $2.0 billion last year, which shows that the idea of a $350 million deficit is not the right deficit to be talking about. We should be talking the cash deficit which was 2b last year, is officially 2.5 b but because of the wildly unexplained and seemingly crazy budget timing etc is actually more likely to be closer to $3.0b
And no one in your business seems to have noticed any of that. If they did, they certainly didn't mention it.
I saw at least 2 "what you need to know from the budget" pieces (none of them from your shop, which gave the best coverage) and both were superficial junk. CBC assigned one its least experienced reporters to covering the budget. It showed.
To me, it's amazing that everyone missed it but I just wrote my Monday.
This Liberal Government certainly isn't a friend of NL Libraries, when Dwight Ball tried to shut half of them down years ago and was reprimanded, they arranged for a study and were told the libraries should be funded by at least $1.5M a year. This has never happed and last year approximately $700,000 was given. This year they gifted $13.5 M and had the gall to say it was $500,000 more than last year. Well last year we were underfunded by $800,000 so now another $1M this year. Clearly, if the liberals could shut down the libraries they would but this way they will underfund them and people will stop going to the library as there will be no more new resources.
One can only move debt around for so long before the bank cuts one off lending. Perhaps in the not so distant future a Friday comes where our government cant make payroll. Only then will our crisis sink into our collective minds. This last budget, no spending plan, is actually frightening. Its like a hockey team down 5-0 in the 3rd who just gives up. They have given up.
This year they will need to borrow a total of almost $5.0 billion in a market that is likely to see tightened amounts of credit available and much higher interest rates.
Any recession will only make the problem worse.
Given that we have had two of our major financial crises within the past decade, this budget is like putting your foot on the accelerator as you blow through the sign that says bridge out ahead.
Our Total Debt Service Ratio is 10.9% for 2023-2024. If Nfld was a country, the Bonds would be given BB or speculative "junk" status. Only thing saving nfld from Junk status must be Canada guaranteeing some of the debt.
It's likely much higher than that. A couple of years ago, they changed the way they reported debt servicing costs in the cash -based version of the budget. I'd been showing that their DSR was heading towards the point in the upper teens and low 20s where provinces would normally be insolvent or as good as broke.
Thats higher than Sri Lanka, who defaulted in 2022 when they were around 15.8%. This is all any politician worth their salt should be talking about. Its the same as a spouse accumulating all kinds of debt and not bothering to disclose it to his/her spouse.
Bear in mind that in 2015 through early 2016, NL struggled to make payroll because of a tightening of markets. That happened again in 2020 pre-COVID.
Going forward, any serious economic upheaval may put us very quickly back in that position.
https://bondpapers.blogspot.com/2019/04/budget-2019-context-nlpoli.html
Here's a 2019 post I wrote to highlight some vulnerabilities in the annual budget.
And we spend more on debt servicing than Education. What a disaster.
I will respectfully push back on behalf of the fourth estate, and the allegation that those questions weren't asked. They were, either to Coady (oil prices) or the officials in the tech briefing (discrepancy between debt and deficit). That doesn't mean we received answers that people will find satisfactory.
The answer to the debt question was essentially "we use 11 forecasters and this is the forecast. Oil is volatile."
The answer to how a $572-million deficit equates to a $1b rise in net debt, $2-billion rise in gross debt, and $4b in borrowing was probably not the full picture, but it was asked and we were told that it was in large part due to a desire for greater liquidity and to prepare to pay off upcoming bond maturities.
Again, that probably doesn't satisfy critics. But it's a lot to process in a couple of hours, and the questions did get asked.
If it was asked, it wasn't reported that I saw. I may have missed it.
The oil price reply as you've given it is laughable. Did anyone press as to how old the forecasts were?
The deficit point has nothing to do with either liquidity or net debt or refinancing in advance debt that matures in the future. It has to do with accounting and the need to understand how that affects what you report.
The issues I raised are not about being critical but about accurately reporting versus simply transcribing.
Yes. I believe March 11 was the most recent update they cited.
But the crude futures changed on April 2 and all those old forecasts were changed radically.
No argument here. The risk of this thing approaching a $1b deficit and our net debt crossing the $20b mark seems pretty high. I will be interested to see how the credit rating agencies respond.
The long-term employment projections (7.6% in 2028 and 5% in 2029) are even more pie in the sky. Pretty much every single thing that could break our way has to, and even then those kind of numbers seem unlikely for NL.
The news of the budget was how obviously and wildly out of date it was.
The second news thing flowing out of that was to ask why now, given everything that says don't do it. It's like the '21 election. Disconnected from reality.
All the budget messaging was as if nothing in the world changed yet everyone in the room including Coady talked about a world that was radically changed.
The chasm between those two things, the surreality of talking about a global trade war and delivering a steady as she goes budget wasn't worthy of comment from you, CBC, NTV, and VO or the Independent AFAIK or the Shoreline. The corporate comments (business, industry, union) were all taken out of the stock box.
The $200 million for trade war relief was radically out of step with where we are in the world. It's a rounding error on a $12 billion budget.
None of that got reported or commented on in any of the coverage of the budget. None of it. Maybe I missed it but I don't think so.
If they are borrowing $3.0 billion on a $12 billion budget (a 25% cash deficit) and your forecasts on oil, employment etc are all based on out-of-date optimistic estimates, and bond yields are climbing (and markets will be super tight) and oil prices are falling then liquidity - another big thing they brought up - is in serious doubt.
We've had serious liquidity issues twice in the past decade. Twice. The task time we had liquidity issues was 1929. The last time a Canadian province had liquidity issues was SK in 1989. That's a fundamental financial problem for anyone. Means you are in danger of not paying pay the bills, including payroll.
We had problems raising money in the 2015-2016 period triggered by Davis and the change in government. The next was the spring on 2020 *before* COVID.
Net debt doesn't matter. It's an assets/liabilities concept when the issue is cash flow. Forget that GNL keeps talking about it. Talk about gross liabilities, which went up $2.0 billion last year, which shows that the idea of a $350 million deficit is not the right deficit to be talking about. We should be talking the cash deficit which was 2b last year, is officially 2.5 b but because of the wildly unexplained and seemingly crazy budget timing etc is actually more likely to be closer to $3.0b
And no one in your business seems to have noticed any of that. If they did, they certainly didn't mention it.
I saw at least 2 "what you need to know from the budget" pieces (none of them from your shop, which gave the best coverage) and both were superficial junk. CBC assigned one its least experienced reporters to covering the budget. It showed.
To me, it's amazing that everyone missed it but I just wrote my Monday.
That's just going from memory though. Not my notes.
This Liberal Government certainly isn't a friend of NL Libraries, when Dwight Ball tried to shut half of them down years ago and was reprimanded, they arranged for a study and were told the libraries should be funded by at least $1.5M a year. This has never happed and last year approximately $700,000 was given. This year they gifted $13.5 M and had the gall to say it was $500,000 more than last year. Well last year we were underfunded by $800,000 so now another $1M this year. Clearly, if the liberals could shut down the libraries they would but this way they will underfund them and people will stop going to the library as there will be no more new resources.
One can only move debt around for so long before the bank cuts one off lending. Perhaps in the not so distant future a Friday comes where our government cant make payroll. Only then will our crisis sink into our collective minds. This last budget, no spending plan, is actually frightening. Its like a hockey team down 5-0 in the 3rd who just gives up. They have given up.
Gave up 10 years ago.
This year they will need to borrow a total of almost $5.0 billion in a market that is likely to see tightened amounts of credit available and much higher interest rates.
Any recession will only make the problem worse.
Given that we have had two of our major financial crises within the past decade, this budget is like putting your foot on the accelerator as you blow through the sign that says bridge out ahead.