Last week, the provincial government announced that it is lowering the cost of borrowing for municipalities, enabling them to invest more in services and infrastructure.
"Municipalities play an important role in shaping Alberta’s vibrant communities and contributing to a stronger province. At a lower rate, the province will now lend money to local authorities, which include municipalities, airports, counties and irrigation districts," stated the provincial government in a press release.
Now, when borrowing money for capital projects like infrastructure, municipalities, airports, counties (like Rocky View County) and irrigation districts will pay the same interest rate as the province. Municipalities anticipate saving roughly $7 million in 2025–2026 and $12 million in 2026–2027 as a result of the shift.
According to the government of Alberta, they are relieving local governments of budgetary strains during a period of high interest rates, freeing up funds for uses other than debt servicing.
"With Alberta’s balancing of the budget, the province has been able to reduce outstanding debt by more than $19 billion. With continued strong results, Alberta’s borrowing costs are expected to remain low."
According to the City of Airdrie, this announcement will provide them with options for financing once it comes into effect. The actual rates will be evaluated when debt draws are required, and the best option for the city will be chosen at that time.
Even Alberta's tiniest communities can profit from the province's finances and established access to international capital markets because of the Loans to Local Authorities program.
“Alberta has lowered our cost of borrowing, and now we are passing that savings on to municipalities. They are our partners in providing services to Albertans, and by working together, we can ensure that investments can be made with a minimum cost to service debt,” explained Nate Horner, President of the Treasury Board and Minister of Finance.
The current loan pricing model under the Loans to Local Authorities program came into effect in December 2021.
"Our government provides billions of dollars in support to municipalities, ranging from grants to capital funding. Lowering the cost of borrowing for municipalities is just one more way we are ensuring that municipalities, counties, airports and irrigation districts can invest in their citizens," shared Ric McIver, Minister of Municipal Affairs.
Lending rates were set at the same level as the province's expected cost of borrowing money on the same terms before the change. The 2025 budget will reflect the modification.
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