Provincial Debt Summary

Public Accounts1999/2000

PUB LIC AC COUNTS 1999/00 89

Over view of Pro vin cial Debt(Un au dited)

The pro vin cial gov ern ment and its Crown cor po ra tions in cur debt to fi nance op er a tions and cap i tal pro jects.Bor rowing for op er a tions is re quired when rev e nues fall short of ex pen di tures and to meet other cash re quire ments such as loans and in vest ments. Bor rowing for cap i tal pro jects fi nances the build ing of schools, hos pi tals, roads, pub -lic tran sit and other so cial and eco nomic cap i tal as sets. As these in vest ments pro vide es sen tial ser vices over sev eralyears, the gov ern ment, like the pri vate sec tor, bor rows to fund these pro jects and am or tizes the costs over the as set’suse ful life.

Pro vin cial debt is re ported us ing two ba sic clas si fi ca tions: (1) tax payer–sup ported debt; and (2) self–sup ported debt.

Tax payer–sup ported Debt— in cludes gov ern ment di rect debt, which is in curred for gov ern ment op er at ing andcap i tal pur poses, and the debt of those Crown cor po ra tions and agen cies which re quire an op er at ing or debt ser vice sub sidy from the pro vin cial gov ern ment or which are fully con sol i dated in the Sum mary Fi nan cial State ments. Ex -am ples in clude debt of the Brit ish Co lum bia Ferry Cor po ra tion, Brit ish Co lum bia Build ings Cor po ra tion, and BCTrans por ta tion Fi nancing Au thor ity.

Self–sup ported Debt— in cludes the debt of com mer cial Crown cor po ra tions and agen cies as well as the Ware -house Pro gram. Com mer cial Crown cor po ra tions and agen cies gen er ate suf fi cient rev e nues to cover in ter est costsand re pay prin ci pal, and may pay div i dends to the prov ince. The Brit ish Co lum bia Hy dro and Power Au thor ity andBrit ish Co lum bia Rail way Com pany are ex am ples of com mer cial Crown cor po ra tions. The Ware house Pro gram isused to take ad van tage of bor row ing op por tu ni ties in ad vance of re quire ments. Even tually, this debt is al lo cated tothe prov ince, Crown cor po ra tions or agen cies; in the in terim, the funds are in vested at mar ket rates.

The fol low ing pro vin cial debt sum mary pro vides ad di tional de tailed in for ma tion and re lated key in di ca torsand benchmarks to al low a more in formed as sess ment of the debt to tals. A rec on cil i a tion is also pro vided to ex plainthe dif fer ences be tween the Debt Sta tis tics re port and the Sum mary Fi nan cial State ments.

The to tal pro vin cial debt as at March 31, 2000 was $34,221 mil lion which con sists of the $33,505 mil lion in theSum mary Fi nan cial State ments, to gether with $586 mil lion in ad di tional debt of self-sup ported Crown cor po ra tions and agen cies and $130 mil lion in third-party guar an teed debt.

90 PROV INCE OF BRIT ISH CO LUM BIA

Chart 1

Warehouse Program$1,320

Commercial and OtherSelf-supported: $7,977

Highways, Ferriesand Transit $3,487

Health Facilities $1,451

Other $1,175 Education $4,978

Government DirectOperating $13,833 1,2

3.9%

23.3%

10.2%

4.2%3.4%

14.6%

40.4%

Taxpayer-supported: $24,924 million (72.8%)

Self-supported: $9,297 million (27.2%)($ millions)/Percent of Total

Total: $34,221 million1Operating debt includes a portion of highway infrastructure debt incurred prior to 1994/95, and ferry infrastructure debt transferred in 99/002Amount includes debt to finance operating deficits.

Pro vin cial Net Debtas at March 31, 2000

(Un au dited)

The ac cu mu lated pro vin cial net debt of $34,221 mil lion has been in curred for var i ous pur poses as shown inChart 1 be low. Over the years, bor row ing ac tiv ity has con trib uted to eco nomic de vel op ment in the prov ince and haspro vided re sources to de liver health, ed u ca tion and so cial pro grams, and trans por ta tion in fra struc ture.

At March 31, 2000, tax payer–sup ported debt to talled $24,924 mil lion—in clud ing debt in curred for gov ern -ment op er at ing pur poses ($13,833 mil lion), ed u ca tional fa cil i ties ($4,978 mil lion), health fa cil i ties ($1,451 mil -lion), trans por ta tion in fra struc ture ($3,487 mil lion) and other debt ($1,175 mil lion). Other debt is com prisedmainly of Brit ish Co lum bia Build ings Cor po ra tion, so cial hous ing, and loans to uni ver si ties and col leges.

At March 31, 2000, self–sup ported debt to talled $9,297 mil lion—in clud ing debt of com mer cial Crown cor po -ra tions and agen cies ($7,977 mil lion) and the Ware house Pro gram ($1,320 mil lion). Com mer cial debt in cludes the debt of Brit ish Co lum bia Hy dro and Power Au thor ity, Brit ish Co lum bia Rail way Com pany, Skeena Cel lu lose Inc,and Co lum bia Ba sin Power Com pany.

PUB LIC AC COUNTS 1999/00 91

0

500

1000

1500

2000

-500

Chart 2

GovernmentOperatingPurposes

Education HealthFacilities

Highways,Ferries

and Transit

Other Commercial WarehouseProgram

$ millionsTaxpayer-supported Self-supported

Change in Pro vin cial Net Debt(Un au dited)

Pro vin cial net debt in creased by $2,214 mil lion in 1999/00; of this, tax payer–sup ported debt in creased by$1,974 mil lion and self–sup ported debt in creased by $240 mil lion (see Chart 2 be low).

Tax payer–sup ported Debt—The 1999/00 in crease of $1,974 mil lion was re lated to the $1,643 mil lion in crease ingov ern ment op er at ing debt, of which $1,080 mil lion was due to the as sump tion of the Brit ish Co lum bia Ferry Cor -po ra tion debt and the re main der was used to fi nance the def i cit, work ing cap i tal and other fi nanc ing trans ac tions.In creases of $381 mil lion were used to fi nance ed u ca tion in fra struc ture and $169 mil lion for health fa cil i ties. Therewas a net de crease in trans por ta tion re lated debt of $154 mil lion, which re flects new cap i tal fi nanc ing of $926 mil -lion to fi nance fer ries, high ways, and pub lic tran sit in fra struc ture, in clud ing the SkyTrain ex ten sion. This amountwas off set by the as sump tion by the prov ince of Brit ish Co lum bia Ferry Cor po ra tion debt of $1,080 mil lion. Therewas a re duc tion in other debt of $65 mil lion.

Self–sup ported Debt—The 1999/00 in crease of $240 mil lion is ex plained by a net in crease in the Ware house Pro -gram debt of $662 mil lion due to ad di tional bor row ing in ad vance of 2000/01 re quire ments, off set by a de crease inthe com mer cial Crown cor po ra tion debt of $422 mil lion, pri mar ily re lated to the re duc tion in the debt of Brit ishCo lum bia Hy dro and Power Au thor ity, which had strong earn ings.

92 PROV INCE OF BRIT ISH COLUMBIA

Rec on cil i a tion of Sum mary Ac counts Def i citto Change in Tax payer–Sup ported Debt and To tal Debt

for the Fis cal Year Ended March 31, 2000(Un au dited)

In Mil lions2000 1999

Tax payer–Sup ported Debt $ $

Sum mary ac counts (sur plus) def i cit for the year ............................................................ (52) 1,003Self–sup ported Crown cor po ra tion and agency in come in ex cess of con tri bu tions to

the Con sol i dated Rev e nue Fund .................................................................................. (190) 95Ad just ment for ex penses not re quir ing work ing cap i tal or other bor row ing ............... (1,261) (1,007)Ac counts re ceiv able, ac counts pay able and other work ing cap i tal net changes ........... 1,316 (116)

To tal op er at ing re quire ment............................................................................................ (187) (25)Cap i tal re quire ments:

Pre paid cap i tal ad vances.................................................................................................. 716 504Tan gi ble cap i tal as set ex pen di tures ................................................................................ 1,236 438Net loan, in vest ment and other re quire ments ............................................................... 209 69

Net in crease in tax payer–sup ported debt........................................................................ 1,974 986Tax payer–sup ported debt—be gin ning of year ............................................................... 22,950 21,964

Tax payer–sup ported debt—end of year .......................................................................... 24,924 22,950

Self–Sup ported DebtWare house Pro gram ......................................................................................................... 1,320 658552513 Brit ish Co lum bia Ltd (Skeena Cel lu lose Inc.) ................................................... 280 221Brit ish Co lum bia Hy dro and Power Au thor ity ................................................................ 6,945 7,474Brit ish Co lum bia Rail way Com pany................................................................................. 655 607Other.................................................................................................................................. 97 97

To tal self–sup ported debt................................................................................................. 9,297 9,057

To tal debt1 ......................................................................................................................... 34,221 32,007

Rec on cil i a tion of To tal Debtto the Sum mary Fi nan cial State ment Debt

as at March 31, 2000(Un au dited)

To tal debt .......................................................................................................................... 34,221 32,007Debt in cluded as part of eq uity in self–sup ported Crown cor po ra tions and agen cies . (586) (554)Con tin gent li a bil i ties for debt of in di vid u als and or ga ni za tions that have been guar an -

teed by the prov ince...................................................................................................... (130) (152)

Sum mary Fi nan cial State ments debt ................................................................................ 33,505 31,301

Com prised of:Tax payer–sup ported debt................................................................................................ 24,794 22,798Self–sup ported debt ......................................................................................................... 8,711 8,503

33,505 31,301

1Total debt, as de fined in the Debt Sta tis tics re port, in cludes the debt of com mer cial Crown cor po ra tions and agen cies, and debt of in di -vid u als and or ga ni za tions guar an teed by the prov ince.

PUB LIC AC COUNTS 1999/00 93

0

500

1000

1500

2000

-500

Chart 3

$ millionsTaxpayer-supported Self-supported

GovernmentOperatingPurposes

Education HealthFacilities

Highways,Ferries

and Transit

Other Commercial WarehouseProgram

BudgetActual

BudgetActual

1 1

2 2

1Adjusted to reflect final public account balances at March 31, 1999.2Effective March 31, 2000, the Province assumed the fiscal agency loans of the BC Ferry Corporation ($1,080 million).

Com par i son to Bud get(Un au dited)

The change in pro vin cial net debt was $501 mil lion less than orig i nally bud geted (per Bud get 99 es ti mate, ad -justed to re flect fi nal Pub lic Ac counts bal ance at March 31, 1999). Chart 3 be low shows the dif fer ence be tween theac tual change in pro vin cial debt and the bud geted change by ma jor cat e gory. The change in tax payer–sup porteddebt was $1,260 mil lion less than bud get, off set by the change in self–sup ported debt which was $759 mil lion higherthan bud get.

Tax payer–sup ported Debt—The change was $1,260 mil lion lower than bud get, due pri mar ily to the lower than ex -pected Con sol i dated Rev e nue Fund op er at ing and fi nanc ing re quire ments, can cel la tion of the Van cou ver Tradeand Con ven tion Cen tre pro ject, de layed trans por ta tion and health cap i tal ex pen di tures off set by in creased schoolscap i tal fi nanc ing.

Self–sup ported Debt—The change was $759 mil lion higher than bud get, due to the change in Ware house Pro -gram debt be ing $1,120 mil lion higher than planned, re flect ing bor row ing in ad vance of 2000/01 re quire ments off -set by the change in the com mer cial Crown cor po ra tions debt be ing $361 mil lion lower than ex pected (pri mar ilydue to re duced Brit ish Co lum bia Hy dro and Power Au thor ity debt).

94 PROV INCE OF BRIT ISH CO LUM BIA

Chart 4

Percent of GDP, at March 31, 2000

Source: Moody’s Investors Service, July 2000

NS Nfld Que NB PEI Sask Ont BC Man Alta0%

10%

20%

30%

40%

50%

60%

In ter pro vin cial Com par i son of Tax payer–sup ported Debtas a Per cent age of Gross Do mes tic Prod uct

(Un au dited)

Chart 4 be low shows the ra tio of each prov ince’s tax payer–sup ported debt as a per cent age of their gross do mes -tic prod uct (GDP). The ra tio of a prov ince’s tax payer–sup ported debt rel a tive to its GDP high lights the abil ity of aprov ince to ser vice its debt load. This rat ing is of ten used by in ves tors and credit rat ing agen cies when as sess ing aprov ince’s in vest ment qual ity. Brit ish Co lum bia’s tax payer–sup ported debt ra tio is one of the low est in Can ada andthis trans lates into a strong credit rat ing and rel a tively low debt ser vic ing costs. Chart 4 shows that, ac cord ing to theMoody’s In ves tors Ser vices, Brit ish Co lum bia has the third low est tax payer–sup ported debt to GDP ra tio of all prov -inces.

More com pre hen sive in for ma tion on the debt of the prov ince and its Crown cor po ra tions and agen cies is pro -vided in the an nual Debt Sta tis tics re port. This doc u ment is is sued con cur rently with the Pub lic Ac counts andpro vides more de tailed in for ma tion to as sist the reader in as sess ing the prov ince’s debt po si tion. This re port isavail able on the Internet at: www.fin.gov.bc.ca.

PUB LIC AC COUNTS 1999/00 97

Sum mary of Pro vin cial Net Debt1

as at March 31, 2000

In Mil lions2000 1999

Tax payer–sup ported Debt $ $

Pro vin cial gov ern ment di rect operating2 ........................................................................ 13,833 12,190

Education3

Schools .............................................................................................................................. 3,609 3,261Post–sec ond ary in sti tu tions ............................................................................................. 1,369 1,336

4,978 4,597

Health Facilities3 ............................................................................................................... 1,451 1,282

High ways, fer ries and pub lic tran sitBC Trans por ta tion Fi nancing Au thor ity......................................................................... 1,843 1,433Brit ish Co lum bia Ferry Corporation2 ............................................................................. 24 973Brit ish Co lum bia Tran sit ................................................................................................. 79 59Pub lic transit3 ................................................................................................................... 952 987SkyTrain extension3 ......................................................................................................... 488 133Rapid Tran sit Pro ject 2000 Ltd ....................................................................................... 101 56

3,487 3,641

OtherBrit ish Co lum bia Build ings Cor po ra tion........................................................................ 615 715So cial housing4 ................................................................................................................. 205 183Home owner Pro tec tion Of fice ........................................................................................ 32 11Uni ver sities and col leges.................................................................................................. 130 137577315 Brit ish Co lum bia Ltd (West ern Star Trucks Hold ings Ltd) ............................. 62580440 Brit ish Co lum bia Ltd (Van cou ver Trade and Con ven tion Cen tre)2 ............... 3 29Lo cal gov ern ments ........................................................................................................... 9 10Other5 ............................................................................................................................... 119 155

1,175 1,240

To tal tax payer–sup ported debt ........................................................................................ 24,924 22,950

Self–sup ported DebtCom mer cial Crown cor po ra tions and agen cies

Brit ish Co lum bia Hy dro and Power Au thor ity ............................................................... 6,945 7,474Brit ish Co lum bia Rail way Com pany................................................................................ 655 607552513 Brit ish Co lum bia Ltd (Skeena Cel lu lose Inc)6 .................................................. 280 221Co lum bia Ba sin Power Company7................................................................................... 94 94Li quor Dis tri bu tion Branch............................................................................................. 3 3

7,977 8,399

Ware house Bor rowing Pro gram....................................................................................... 1,320 658

To tal self–sup ported debt................................................................................................. 9,297 9,057

To tal pro vin cial debt ......................................................................................................... 34,221 32,007

98 PROV INCE OF BRIT ISH CO LUM BIA

Key In di ca tors of Pro vin cial Debt1

for the Fis cal Year Ended March 31, 2000

2000 1999

Budget8 Ac tual Ac tual

Debt to Rev e nue (per cent)To tal pro vin cial ............................................................................................ 113.9 101.6 102.3Tax payer–sup ported .................................................................................... 116.9 100.6 98.6

Debt per Ca pita ($)To tal pro vin cial ............................................................................................ 8,582 8,506 8,006Tax payer–sup ported .................................................................................... 6,472 6,195 5,740

Debt to GDP (per cent)To tal pro vin cial ............................................................................................ 31.7 29.9 28.8Tax payer–sup ported .................................................................................... 23.9 21.8 20.7

In ter est Bite (cents per dol lar of rev e nue)To tal pro vin cial ............................................................................................ 8.7 7.5 7.8Tax payer–sup ported .................................................................................... 8.6 7.1 7.4

In ter est Costs ($ mil lions)To tal pro vin cial ............................................................................................ 2,640 2,528 2,452Tax payer–sup ported .................................................................................... 1,934 1,762 1,723

In ter est Rate (per cent)Tax payer–sup ported .................................................................................... 7.4 7.4 7.7

Back ground In for ma tion:

Rev e nue ($ mil lions)To tal pro vin cial ............................................................................................ 30,489 33,679 31,294Tax payer–sup ported .................................................................................... 22,403 24,784 23,285

To tal Debt ($ mil lions)To tal pro vin cial ............................................................................................ 34,722 34,221 32,007Tax payer–sup ported .................................................................................... 26,184 24,924 22,950

Pro vin cial GDP ($ mil lions)*....................................................................... 109,540 114,480 110,948

Pop u la tion (thou sands at July 1)** ............................................................. 4,046 4,023 3,998

*GDP for the year end ing in the fis cal year (e.g. GDP for 1999 is used for the fis cal year end ing March 31, 2000). GDP for 1999 is a Min is tryof Fi nance and Cor po rate Re la tions es ti mate (GDP num bers were not avail able from Sta tis tics Can ada at the time of pub li ca tion).

**Pop u la tion at July 1st within the fis cal year (e.g. pop u la tion at July 1, 1999, is used for the fis cal year end ing March 31, 2000).

PUB LIC AC COUNTS 1999/00 99

Sum mary of Key Bench marksfor the Fis cal Year Ended March 31, 2000

2000Bench mark

2000Ac tual

Tax payer–sup ported debt as a per cent of pro vin cial GDP............................................. 22.0 to 27.08 21.8Tax payer–sup ported in ter est ex pense per dol lar of rev e nue (cents)............................ cap of 9.09 7.1

1Net debt is af ter de duc tion of sink ing funds and un am or tized dis counts, and ex cludes ac crued in ter est. Gov ern ment di rect and fis calagency debt ac crued in ter est is re ported in the gov ern ment’s ac counts as an ac count pay able. Fig ures for 1999 pro vin cial net debt and key in di ca -tors of pro vin cial debt have been re stated to con form with the pre sen ta tion used for 2000.

2Effective March 31, 2000, the pro vin cial gov ern ment as sumed re spon si bil ity for the fis cal agency loans of the Brit ish Co lum bia Ferry Cor -po ra tion ($1,080 mil lion) and 580440 Brit ish Co lum bia Ltd (Van cou ver Trade and Con ven tion Cen tre—$70 mil lion).

3Represents gov ern ment di rect debt in curred for cap i tal fi nanc ing of ed u ca tion and health fa cil i ties and pub lic tran sit in fra struc ture.4Includes the Brit ish Co lum bia Housing Man age ment Com mis sion and Pro vin cial Rental Housing Cor po ra tion.5Includes debt of the Brit ish Co lum bia As sess ment Au thor ity, Pa cific Racing As so ci a tion (fis cal agency loans), Vic to ria Line Ltd., stu dent

as sis tance loans, loans guar an teed to ag ri cul tural pro duc ers, guar an tees is sued un der eco nomic de vel op ment as sis tance pro grams and the for -mer Brit ish Co lum bia home mort gage as sis tance and sec ond mort gage pro grams, and non–guar an teed debt of the Le gal Ser vices So ci ety, Pa -cific Na tional Ex hi bi tion, Okanagan Val ley Tree Fruit Au thor ity, and Tour ism Brit ish Co lum bia.

6Although the debt of 552513 Brit ish Co lum bia Ltd. (Skeena Cel lu lose Inc.) is con sid ered to be self–sup ported, fu ture prof it abil ity is un -cer tain due to vol a til ity of world pulp prices and their po ten tial im pact on Skeena Cel lu lose Inc. As the prov ince is not the sole share holder ofSkeena Cel lu lose Inc., a por tion of this debt may be at trib ut able to the mi nor ity share holder.

7Columbia Ba sin Power Com pany is a joint ven ture of Co lum bia Power Cor po ra tion and Co lum bia Ba sin Trust.8Figures pre sented in the Bud get ‘99 Re ports doc u ment.9Benchmark pre sented in the Bud get ‘98 Re ports doc u ment was re tained by gov ern ment for fis cal 1999/00.