Province of Manitoba. Economic and Fiscal Update

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1 Province of Manitoba Economic and Fiscal Update Manitoba Finance: July

Manitoba s Economy One of ten Canadian provinces (fifth-largest in population) Centrally located in North America with a comprehensive transportation and communication network Total Area 650,000 km 2

2 Manitoba s Economy One of ten Canadian provinces (fifth-largest in population) Centrally located in North America with a comprehensive transportation and communication network Total Area 650,000 km 2 (almost three times the area of the U.K.) Population: 1.32 million, the secondfastest growing province in 2015 and 2016 Capital: Winnipeg, Pop. 811,900 Extensive natural resources (minerals, forests, fertile soil, freshwater lakes) Sound credit rating: Moody s: Aa2 (stable) and S&P: AA- (Neg) 2

Broad and Balanced Industrial Base The Manitoba economy has a relatively

contributing over 5% to total value-added output The range in contribution from

similar sized sectors Manitoba is the most stable economy among provinces with

3 Broad and Balanced Industrial Base The Manitoba economy has a relatively well-balanced industrial base with a majority of medium-sized industries each contributing over 5% to total value-added output The range in contribution from the smallest to the largest industry is the narrowest among provinces: many similar sized sectors Manitoba is the most stable economy among provinces with steadiest growth in: Real GDP Employment Labour income International merchandise exports Manufacturing sales 3

4 Diversified Industries GDP By Industry Shares, 2016 Health and Social Services, 8.0% Public Administration, 7.7% Accommodation, Food, Arts and Entertainment and Other Services, 4.3% Education Services, 5.4% Professional and Scientific, 3.1% Agriculture, Forestry and Fishing, 3.7% Mining, Oil and Gas, 5.0% Utilities, 3.0% Construction, 8.4% Manufacturing, 9.8% Goods-Producing Information, Culture, Administration and Management of Companies, 5.0% Real Estate, 3.6% Wholesale, 5.8% Retail, 5.8% Commercial Services Non-Commercial Services Note: Excludes imputed rent Finance and Insurance, 5.9% Transportation, 6.4% Sources: Statistics Canada and Manitoba Finance 4

5 Broad and Balanced Export Market 40.0 Share of Exports to Non-U.S. Markets, (Per Cent) Expanding into Non- Traditional Markets 80.0 Manitoba s Share of Interprovincial and International Exports, (Per Cent) Balancing Domestic and International Sales Manitoba Canada Interprovincial International Source: Statistics Canada 5

6 Manitoba s Broad Export Base Grains, Oilseeds and Livestock Aerospace Components and Service Transit and Inter-City Buses Processed Food Products Machinery and Equipment Mining and Oil Extraction Electricity (Mostly Hydro) Industrial Chemicals Pharmaceuticals 6

7 Expanding Population Annual Population Growth, (Per Cent) Manitoba Exceeded Canada s Population Growth in each of the Last Six Years 18,000 16,000 International Immigration, (Persons) Recruiting International Skilled Workers , Year Historical Average 0.6% 12,000 10, , , , , Source: Statistics Canada 7

8 Low Unemployment Rate Unemployment Rate, 2016 (Per Cent) Among the Lowest Unemployment Rates and Among the Highest Labour Force Participation Rates in Canada BC MB SK ON QC CAN NS AB NB PE NF Source: Statistics Canada 8

9 Moderating Sales Manufacturing Sales, Year-to-Date (Annual Growth in Per Cent) 8.0 Gradual Improvements in Manufacturing Sales YTD Source: Statistics Canada 9

10 Firm Household Finances Household Debt Per Capita, 2016 (In Dollars) Mortgage Arrears: Delinquency Rate (90+ days) 2016 (Per Cent) 60,000 50,000 Lowest Household Debt per Capita Among Provinces Stable Mortgage Financing , ,000 20,000 10, MB QC PE NB SK NS NF CAN AB ON BC - ON BC CAN MB QC AB SK AC* U.S. * Atlantic Canada Sources: Bank of Canada, Canadian Bankers Association and Federal Reserve of New York 10

11 Economic Performance Real GDP Growth, F (Per Cent) 3.5 Manitoba Growth Moderated in Canada and Manitoba Due to Low Commodity Prices, but Expected to Improve in the Near Term Canada Trend Line F 2018F Sources: Statistics Canada, Manitoba Bureau of Statistics and Manitoba Finance Survey of Economic Forecasts 11

12 Economic Outlook, 2017f-2018f Manitoba Finance Survey of Economic Forecasts 2017f 2018f Manitoba Canada Manitoba Canada Percent Growth Unless Noted Real GDP Nominal GDP Employment Unemployment Rate (%) Consumer Prices f Forecast based on Manitoba Finance Survey of Economic Forecasts Source: Manitoba Finance Survey of Economic Forecasts 12

13 Restoring Fiscal Discipline Budget 2017: Responsible Recovery Restoring credit ratings, meeting budget targets, stabilizing net debt to GDP and sustainable investment in strategic infrastructure Foundation for Strong Fiscal Fundamentals Fiscal Performance Review of core government departments Review of all tax credits New legislation: The Fiscal Responsibility and Taxpayer Protection Act The Public Service Sustainability Act The Health Sector Bargaining Unit Review Act The Red Tape Reduction and Government Efficiency Act 13

14 Responsible Recovery Annual Surplus (Deficit) to p (Millions of Dollars) -200 (185) (181) (560) (522) (430) (549) ,000-1,200 (1,001) (698) (846) (872) (840) New Administration f forecast, b budget and p projection Source: Manitoba Finance 14

15 Comparable Among Peers Net Debt to GDP Ratio, B (Per Cent) Average Among Provincial Peers Interest on Debt to Revenue, B (Cent/Revenue) Below Average Among Provincial Peers 0.0 AB SK BC PE CAN MB NS ON NB QC NL 0.0 AB SK BC MB PE NS NB CAN ON QC NL Source: Manitoba Finance 15

16 Budget 2017 Sinking Funds and Other Earnings 1.5% Federal Transfers 25.8% Revenues Income Taxes 26.0% Community, Economic and Resource Development 9.0% Justice and Other 7.6% Families 12.6% Expenses Debt Servicing 5.8% Health 39.2% Fees and Other Revenue Net Income of 14.3% Government Business Enterprise 4.4% All Other Taxes 28.0% Education 25.8% Source: Manitoba Finance 16

17 Manitoba Quebec British Columbia Saskatchewan Wyoming Kentucky Texas North Dakota South Dakota Minnesota Wisconsin Ontario California North America s Clean Energy Leader 97.5% of electricity generation is hydro, 2.3% is wind and 0.2% is thermal Retail Price of Electricity (Cents/kWh $C) Roughly 1/4 of the electricity generated is exported outside of Manitoba (U.S., Canada) Manitoba Hydro s current generation 8 capacity is 5,680 MW, with an additional 4,400 MW more of potential 6 generation identified Source: Manitoba Hydro, 2015/2016 Annual Report 17

Keeyask Hydro Generating Station Project Design Capacity: 695 MW Anticipated Completion: 2021/22

18 Manitoba Hydro Capital Initiatives Manitoba Hydro is currently investing in both a major generation project and transmission project. Keeyask Hydro Generating Station Project Design Capacity: 695 MW Anticipated Completion: 2021/22 Anticipated Cost: $8.7B Bipole III Transmission Line Project Design Capacity: 1,364 km Anticipated Completion: 2018/19 Anticipated Cost: $5.0B Source: Manitoba Hydro 18

19 Manitoba Credit Ratings Profile Manitoba s credit rating remains strong given elevated global economic uncertainty. Manitoba s credit rating is generally the highest among non-resource rich provincial economies. Moody s Credit Ratings S&P Credit Ratings BC Aaa BC AAA SK Aaa SK AA AB Aa1 [Neg] QC AA - MB Aa2 MB A + QC Aa2 AB A + ON Aa2 ON A + NS Aa2 NS A + NB Aa2 NB A + PE Aa2 PE A NL Aa3 [Neg] NL A Sources: Moody s Investor Services and Standard and Poor s Rating Services 19

20 Borrowing Requirements C$6.7 billion Refunding Maturing Debt $2.1 billion New Cash Requirements $4.6 billion $468M Other Crowns & Org. $779M General Programs $418M Capital Investments $2,967M Manitoba Hydro Budget 2017 was tabled on April 11, Expected borrowing requirements for fiscal year 2017/18 are C$6.7 billion. Planned funding through both domestic and international capital markets. To date, we have funded $4.14 billion, 62% of our needs for fiscal 2017/2018. Source: Manitoba Finance 20

21 Borrowing Program (C$ Billion) 8.0 Future Expectations International Domestic / / / / / / /2018b b budget Source: Manitoba Finance 21

22 Funding Sources (Apr 1, July 27, 2017) AUD MTN 4% U.S. Global 21% CAD Public Debentures 46% FRN 7% EMTN 10% MTN 11% Savings Bonds 1% (discontinued in 2016) GBP, JPY, HKD & EURO Source: Manitoba Finance 22

23 Debt Maturity Profile (C$ Billion) Manitoba conducts prudent debt management practices and has achieved a stable level of debt maturity profile over the intermediate term As of July 27, Excludes short-term debt and other liabilities, and the incremental impact of future financing. Net of sinking fund maturities. 23

24 Debt Portfolio Fixed/Floating Ratio March 31, 2016 March 31, 2017f Floating 8% Floating 10% Fixed 92% Fixed 90% f forecast. All figures for Core Government debt Source: Manitoba Finance 24

25 Thank you! Regularly updated Economic and Financial Reports are available on the internet at: 25

Province of Manitoba. Economic and Fiscal Update

Province of Manitoba. Economic and Fiscal Update Province of Manitoba Economic and Fiscal Update Manitoba Finance: October 2017 1 Manitoba s Economy One of ten Canadian provinces (fifth-largest in population) Centrally located in North America with a