The provincial government recently announcing a balanced operating surplus isn’t necessarily good news, in fact, it could be misleading.
A study released yesterday by the Fraser Institute shows BC’s debt will grow by 2 billion dollars this year, which could lead to several problems.
“Things could happen where interest rates go up, the cost of borrowing goes up, the government debt could spiral out of control. It could warrant things like increases in taxes, program spending cuts, or even more borrowing.”
That’s Resident Scholar in Economic Policy at the institute, Charles Lammam, who says the problem is that it’s only the interest from debt that gets factored into the government’s operating budget, not the principal.
He says that’s how the province’s growing debt remains hidden in it’s capital budget… something he hopes taxpayers will start noticing through the study.