Premier Jason Kenney, seen here on Feb. 24, 2020, will play host Monday to a conference call with a new economic advisory council, chaired by Calgary economist Jack Mintz.
CODIE MCLACHLAN/The Globe and Mail
Alberta is set to release an economic stimulus package this week as the province has been hit hard from the COVID-19 pandemic and plunging oil prices.
Premier Jason Kenney will play host Monday to a conference call with a new economic advisory council, chaired by Calgary economist Jack Mintz, as the province hashes out the best way to give its teetering economy a fiscal shot in the arm.
At a news conference on Friday, Mr. Kenney said the goal was to announce an initial package of assistance by the end of this week.
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With fiscal year-end approaching, along with spring breakup for oil drilling rigs and the start of construction season, Mr. Kenney said his government is moving as quickly as possible on an economic rescue package.
“I expect a lot of very important economic decisions to be made for the Alberta economy by business leaders over the course of the next two and half weeks. We want them to know the government of Alberta will be there as much as we reasonably can,” he said.
The Premier and Energy Minister Sonya Savage have met with the energy sector and will continue talks with other sectors in the coming days to nail down the government’s next moves.
Alberta leans heavily on non-renewable resources, which are forecast to comprise around 13 per cent of provincial revenue in the 2019-20 fiscal year.
But mid-sized energy producers are facing a liquidity crisis as lenders tighten their purse strings and the per-barrel price of oil withers. Western Canadian Select crude has hovered just above $30 over the past few months, but plunged below $20 last week in the face of decreased demand because of the new coronavirus spread and an escalating Saudi-Russia oil price war.
On Friday, the federal government announced that the two Crown corporations that lend to Canadian businesses – Export Development Canada (EDC) and Business Development Bank of Canada (BDC) – will boost their loans by $10-billion, as part of a strategy to inject additional liquidity into the economy.
While details on that plan are yet to be released, federal Finance Minister Bill Morneau said small and medium businesses would receive most of the funds. Smaller companies are facing the prospect of severe hits to cash flow as social distancing hurts the retail and hospitality sectors, in particular. Loans from EDC and BDC could provide a financial bridge during the fight against the virus.
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Mr. Kenney said he was encouraged by the move, but that his government is doing the calculations to figure out if it is adequate support for the already-struggling energy sector. If not, his government will pursue additional credit tools.
His United Conservative government is considering an instrument similar to the Troubled Asset Relief Program (TARP) rolled out in the United States during the global financial crisis. Under TARP, the U.S. Congress authorized US$700-billion to bail out financial companies and automakers.
Alberta Finance Minister Travis Toews said Friday he has raised energy-industry concerns with Mr. Morneau, and is working with Alberta’s financial institutions to ensure that the province is prepared to meet credit and liquidity challenges.
Mr. Kenney stressed that all areas of Alberta’s economy – including tourism, hospitality and travel – will be hit by the pandemic, and said his government is “looking at a whole suite of measures” to help those industries.
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
