Province of Nova Scotia CREDIT UPDATE May 2014 Peter V. Urbanc Executive Director Department of Finance and Treasury Board Overview • Majority government elected in October 2013 • Stimulating private-sector economic growth is a key priority • Borrowing requirements of $770 million for 2014–2015 • Net debt to GDP ratio of 37.5% as at March 31, 2014 • Deficit of $279.0 million for 2014–2015 • Balanced budget by 2017–2018 Nova Scotia At A Glance Nova Scotia’s Economy Output and Income Output by Sector $ current per capita Average 2008-2012 $ 2007 chained per capita Average 2008-2012 80,000 80,000 70,000 70,000 60,000 60,000 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 0 CAN NL PE NS NB PQ ON MB SK AB BC ■ GDP ■ Household Income CAN NL PE NS NB PQ ON MB SK AB BC ■ Health, Education, Public Admin ■ Services-Private ■ Goods 4.0% 7% 3.5% 6% 3.0% 2.5% 5% 2.0% 4% 1.5% 3% 1.0% 2% 0.5% 0.0% 1% -0.5% 0% -1.0% -1% 2014-2015 Fiscal Plan Estimate 2013-2014 Forecast 2013-2014 Estimate 2014-2015 Revenues 9,481.2 9,222.2 9,566.1 Less: Departmental Expenses Tax Credits and Rebates Pension Valuation Adjustment Debt Servicing Costs 8,395.2 129.4 110.8 888.9 9,524.2 8,463.4 114.2 391.0 856.2 9,825.0 8,851.6 115.6 90.5 878.0 9,936.0 Consolidation Adjustment (School boards, DHAs etc.) 59.4 40.5 90.6 Surplus/(Deficit) 16.4 (562.1) (279.0) ($ millions) Budget Returning to Balance by 2017−18 Surplus (Deficit) Millions $ 600 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 Nova Scotia’s Revenues/Expenses Refundable Tax Credits and PVA 2.1% Other Provincial Sources 14% HST 17.9% Motive Fuel Taxes 2.6% Tobacco Taxes 2.4% 9.6 ($billion) TOTAL REVENUES Health and Wellness 41.3% Federal Sources 34% Other Departments 18.5% ($billion) TOTAL EXPENSES 2014-2015 Income Taxes 29.1% 9.9 Debt Servicing Costs 8.8% Transportation 4.1% 2014-2015 Community Services 9.1% Education and Early Childhood Development 12.3% Universities 3.8% Nova Scotia’s Net Debt to GDP 50% 45% 40% 35% 30% 25% 20% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt Management Practices Are Conservative 11% of Debt is Floating Diversified Funding Sources CPP 7.2% Floating 11.1% Domestic 46.7% Fixed 88.9% Outstanding market debt of $15.1 billion as of March 31, 2014 MTN 21.4% USD 24.0% GBP 0.8% 0 ■ Sinking Fund ■ Non-Sinking Fund 2062-63 2042-43 2041-42 2040-41 2039-40 2038-39 2037-38 2036-37 2035-36 2034-35 2033-34 2032-33 2031-32 2030-31 2029-30 2028-29 2027-28 2026-27 2025-26 2024-25 2023-24 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Gross Debt Maturity Profile Millions $ 2,000 1,750 1,500 1,250 1,000 750 500 250 0 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Modest Borrowing Needs Millions $ 3000 2500 2000 1500 1000 500 Flexible Funding Program Flexible funding program allows us to match market demand with our needs 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 $1.2 billion MTNs $3.8 billion in public issues, US $750 mln Global $1.5 billion 50 year benchmark $1.125 billion in CDOR & CORRA FRNs PROGRAM SIZE $1.48 BLN $1.8 BLN $2.0 BLN $2.0 BLN $1.4 BLN $1.0 BLN $770 MLN Well-Managed Pension Liability PSSP Funded Status TPP Funded Status 120 120 100 100 80 80 60 60 40 40 20 20 0 2006 2007 2008 2009 2010 2011 2012 0 2006 2007 2008 2009 2010 2011 2012 2013 • Plan very close to being fully funded • Joint Trusteeship, defined benefit-plan • Indexing contingent on health of plan • Pre-2006 retirees indexed at CPI less 1% • Joint Trusteeship and target defined benefit structure adopted in 2013 • Post-2006 retirees have indexing contingent on health of plan Regional Energy Development Lower Churchill/Maritime Link projects will provide stable renewable energy source Federal Shipbuilding Contract Irving Shipbuilding’s $300M modernization of the Halifax Shipyard is well underway Before After Significant Offshore Energy Potential The 2011 Play Fairway Analysis has revealed an estimated 120-trillion cubic feet of natural gas and eight billion barrels of oil offshore H-Energy Pierdae Sable Offshore Energy Project Pipeline Alton Deep Panuke Pipeline NOVA SCOTIA Proposed Projects Point Tupper Fractionation Plant Goldboro Gas Plant Maritime & Northeast Pipeline Jointly Owned Facilities * Algonquin Gas Transmission Company PNGTS Pipeline Tennessee Gas Pipeline Company TransQuebec and Maritimes Corridor Resources Supply Lateral Brunswick Pipeline Repsol-Irving Canaport LNG Terminal * Owned Jointly by Maritimes & Northeast Pipeline, L.L.C. U.S. and Portland Natural Gas Transmission System (PNGTS) Modified after: M & NE (1101-15811) Feb 10, 2014 (BLK) Nova Scotia’s Credit Ratings (May 2014) Long-Term Outlook Moody’s Aa2 Stable S&P A+ Stable A-1+ A (high) Stable R-1(middle) DBRS Short-Term Fiscal Projections 2014-2015 to 2017-2018 ($ millions) Estimate 2013-2014 Forecast 2013-2014 Estimate 2014-2015 Estimate 2015-2016 Estimate 2016-2017 Estimate 2017-2018 9,481.2 9,222.2 9,566.1 9,889.2 10,153.2 10,492.9 8,395.1 129.4 110.8 888.9 9,524.2 8,463.4 114.2 391.0 856.2 9,824.8 8,851.6 115.6 90.5 878.0 9,935.7 9,028.7 117.8 92.2 890.6 10,129.3 9,209.2 121.3 106.4 911.8 10,348.7 9,393.3 123.9 117.6 918.6 10,553.4 Consolidation Adjustments 59.4 40.5 90.6 74.1 74.1 74.1 Provincial Surplus (Deficit) 16.4 (562.1) (279.0) (166.0) (121.4) 13.6 13,989 39,099 35.8% 14,609 38,971 37.5% 15,005 40,112 37.4% 15,433 41,819 36.9% 15,640 43,815 35.7% 15,701 45,877 34.2% Total Revenue Departmental Expenses Refundable Tax Credits Pension Valuation Adjustment Debt Servicing Costs Total Expense Net Debt Nominal GDP Debt GDP Ratio Questions?
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