Debt Reduction Plan Is Next Logical Step

The province is ready to take the next step on the road to greater economic prosperity, says Finance Minister Neil LeBlanc.

Two successive balanced budgets, the use of general accepted accounting principles and four years of "hard work, tough choices and responsible financial management," mean the province is now ready to begin debt reduction, Mr. LeBlanc said today, June 11.

"Now, it's time to take the next logical step. To advance the plan and establish targets to reduce Nova Scotia's debt," said the minister.

The debt reduction plan will bring a steady reduction in the province's $11.7 billion debt, beginning in 2007. Like the province's plans for a balanced budget, government will commit the debt reduction initiative to legislation that gives the plan the force of law.

There are three separate but related parts to the plan:

• First, government will build a budget reserve fund for debt reduction. In fiscal 2007-08, the budget reserve fund and the budget surplus will reach or exceed $70 million.
• Second, a portion of the interest on government investments will be used to create a fund for debt retirement.
• Third, extraordinary revenues and gains from the sale of provincial assets will be used for debt retirement.

Mr. LeBlanc said the province's plan does not come at the expense of social and economic prosperity. A $250 million annual capital program is included to maintain and improve roads and bridges, build new and repair older schools.

"The graduated approach will result in steady debt reduction beginning in 2007. It will also permit the province to maintain and improve health, education and other programs; as well as reduce the tax burden on working Nova Scotians, and thereby improve the province's competitive position," he said.

The province can expect to see improved provincial credit ratings and lower cost borrowing within three to five years under terms of the plan. Over the long term, reduction of debt and of annual debt servicing payments will make more money available for health care, education or to further reduce taxes.

"We said we would balance the budget, not in the first year, but in the third year of our first mandate. We achieved that goal -- putting government in position to balance the budget each and every year. And we did that while maintaining and improving health, education and other key public programs," said Mr. LeBlanc. "The same approach strikes the right balance in addressing Nova Scotia's debt."

For more information see the Web site at www.gov.ns.ca/finance/debtplan