Ontarians will be riding more new public transit lines, but borrowing to pay for them will boost the province’s net debt an extra $50 billion by 2021, to a whopping $350 billion.
Those numbers were released Tuesday in a new report by Ontario’s independent Financial Accountability Office (FAO), which warned the province faces the risk of higher interest rates because of the debt load.
“Ontario’s interest payments on new debt could increase if lenders view Ontario as a more risky borrower, even in the absence of changes in market interest rates,” said the 13-page report by financial analysts Diarra Sourang and Peter Harrison.
The debt burden in Ontario is one of the highest of all provinces.
Finance Minister Charles Sousa defended the 12-year program, which will spend $160 billion on new and improved transit and other infrastructure, including the new Eglinton Crosstown line and light rail transit on Hurontario in Mississauga.
With the provincial economy now growing faster than projected, Ontario is in a better financial position, said Sousa, who announced Monday that gross domestic product (GDP) rose 0.8 per cent in the first quarter of the year, faster than any G7 nation.
“We know that investing in infrastructure spurs economic growth and increases GDP which is why we’ve decided to make a historic $160-billion investment in roads, bridges, schools and hospitals across Ontario,” Sousa said in a statement.
“It’s true, we are already making capital investments to promote strong long-term economic performance.”
Ontario is taking advantage of record-low interest rates to make the infrastructure investments, added Sousa, noting long-term borrowing is forecast to be at its lowest levels since the deep recession of 2008.
He said the province remains on track to eliminate its deficit by 2018, although the FAO has cautioned that deficits could soon return because of spending pressures on the government.