WHITEHORSE - The Official Opposition is calling on the Liberal government to update their budget forecasts, in light of the recent 0.25% hike made to the Bank of Canada’s interest rates.
Last week the Bank of Canada announced that they would be increasing the overnight interest rate to a total of 0.75%.
The Premier’s Budget states, “higher interest rates may dampen investment spending…unforeseen increases could affect investment in Yukon.”
Even at the time the Premier released his Budget, his government was ignoring evidence and underestimating future interest rates. The Liberal budget assumes the 3 month Treasury Bill rate would remain at 0.5% until 2019. However, at the same time, major Canadian Financial Institutions were estimating the rates to be much higher.
“The Premier should not be surprised by this, considering major Canadian Financial Institutions and even the Parliamentary Budget Officer have been saying interest rates were going to be far higher than the Premier’s projections,” said Official Opposition Finance Critic Brad Cathers.
For example, in April, RBC’s forecasts were estimating the 3 month Treasury Bill rate to be 1.4% in 2018. Now RBC’s forecast has increased to 1.6% by 2018 – over a full percentage point higher than the 0.5% in the Premier’s own budget estimates.
This means that the Premier’s estimates for economic growth and impacts of borrowing money are not in line with reality.
“Despite claims from the Premier that his new Liberal budgeting process would be an improvement it is clear that it’s not open, it’s not transparent, and apparently it isn’t even accurate,” added Cathers. “Not only does the budget not account for the impacts of the carbon tax, but it is not projecting future years of interest or economic growth properly.”