B.C.'s debt is taking a growing share of provincial revenues

This year British Columbia will divert just over six cents of every revenue dollar to interest payments, rising to an estimated 8.2 cents by the end of the fiscal plan, while the budget forecasts a record $13.3-billion deficit.

British Columbia's government is allocating a growing portion of its revenue to interest on provincial debt. The interest bill is now a leading cost pressure in the budget and is larger than spending on child welfare in the current year. Over the past four years the share of revenue used for interest has risen noticeably, and the province recently reported a record deficit. Finance officials presented a three-year plan that projects higher interest costs and ongoing pressure on revenues and spending. Key details: - Interest payments are expected to use a little more than six cents of every dollar in revenue this year and are projected to reach about 8.2 cents by the end of the fiscal plan. - The budget projects a record $13.3-billion deficit for the coming year and shows debt-to-GDP rising from about 15% in 2022 to roughly 30% now. - The federal Parliamentary Budget Officer's report had previously described B.C.'s fiscal plans as among the most unsustainable, according to its analysis based on the 2024 budget year. - Morningstar DBRS posted a negative outlook for the province last year and signalled a possible credit-rating downgrade after the recent budget; the agency will review budget documents in the coming weeks. Summary: Rising interest costs are reducing the share of revenue available for other services and are cited as a principal and growing pressure in the budget. Officials say the budget begins a multi-step process to adjust spending, while rating agencies are reviewing the province's fiscal outlook. Undetermined at this time.