Blog Archive : June, 2020

Provincial Government Liquidity Outlook

Economic uncertainties generated by the public health response to COVID 19 and record low oil prices have disrupted financial markets. 
Beginning in March, there was an abrupt global flight to cash, which began to constrain credit access for provincial governments, among other Canadian issuers of debt. Soon after, the Bank of Canada intervened to directly support liquidity in provincial governments’ funding markets by buying short-term and long-term debt, and by purchasing provincial debt on a temporary basis using term repurchase operations.
The purpose of this report is to address questions from several parliamentarians about potential uptake of the new Bank of Canada (the Bank) provincial liquidity-support programs.
The Bank’s liquidity support programs are designed to address temporary financing challenges. Overall, PBO estimates that provincial governments will have liquidity requirements of at least $195 billion by the end of 2021. This accounts for $67 billion in COVID-related provincial spending, $119 billion of provincial debt that must be refinanced in 2020 or 2021, and $9 billion in planned deficits (pre-COVID-19).
On 31 May, the Bank held $59 billion in provincial debt.
Relative to their provincial economies, the governments of Manitoba and Newfoundland and Labrador have the largest estimated liquidity needs until 2021.
Long-term fiscal sustainability for provincial governments is determined by structural factors and would not be meaningfully affected by these liquidity-support programs.

Canada Emergency Response Benefit – Eight Week Extension and Phase-out Rate

Dan Albas, MP for Central Okanagan—Similkameen—Nicola, requested that the PBO cost a proposal modifying the Canada Emergency Response Benefit (CERB) to adopt a phase-out for the benefit of $0.50 for each dollar of employment income above $1,000 per month in addition to the eight week extension announced on June 16, 2020.  
The modifications to the CERB program are assumed to be implemented on July 5, 2020.
PBO estimates the cost to modify the extended CERB program (phased reduction) starting July 5, 2020 to be an additional $3.1 billion.

Supplementary blog post on the Investing in Canada plan

The PBO was asked for clarification regarding the quality of the dataset used in our analysis of the Investing in Canada Plan (IICP).

Federal debt: Frequently Asked Questions

This blog post provides information on frequently asked questions regarding Government of Canada debt. 

Scenario Analysis Update: COVID-19 Pandemic and Oil Price Shocks

This report provides an updated scenario analysis to help parliamentarians gauge potential economic and fiscal implications of the COVID-19 pandemic and recent oil market developments.
This report incorporates announced federal budgetary measures up to and including 12 June 2020.

Estimating the top tail of the family wealth distribution in Canada

PBO has developed a modelling approach to estimate the top tail of the family wealth distribution in Canada. The modelling approach produces a new micro database of high-net-worth families to undertake analytical and costing work. This report describes the approach to constructing the database and showcases its analytical capabilities.

Update on the Investing in Canada Plan

In response to interest from parliamentarians, the Parliamentary Budget Officer (PBO) updated its monitoring of the Investing in Canada Plan (IICP). Under the IICP, the Government has committed to spend $187.8 billion over 2016-17 to 2027-28. The PBO solicited data from all 20 departments and agencies responsible for delivering IICP programming. Working with Infrastructure Canada, we compiled a data set of 33,112 entries for projects with $34.9 billion in spending since 2016-17.

Supplementary Estimates (A) 2020-21

The Supplementary Estimates (A) 2020-21 is the first of three planned Supplementary Estimates in 2020-21 and supports the third appropriation bill for the current fiscal year.

Proposed Changes to the Canadian Emergency Response Benefit (CERB)

A parliamentarian requested that the PBO cost a proposal modifying the CERB to adopt a phase-out for the benefit of $0.50 for each dollar of employment income above $1,000 per month. Modifications to the CERB program are assumed to be implemented on July 5, 2020.
PBO estimates the cost to modify the CERB program starting July 5, 2020 to be an additional $967 million.

Explaining the Cost Estimate of the Canada Emergency Commercial Rent Assistance Program

We previously published an estimate that the cost of the Canada Emergency Commercial Rent Assistance Program will be $483 million. This post provides additional detail regarding the calculations underlying that estimate.