Garry Steski is currently the Assistant Deputy Minister – Finance (Treasury Division), which for some reason is in the Finance Division of the Ministry of Finance, and not the Treasury Board Secretariat. (Why? Steski explained it, but I didn’t listen because I don’t really care.)
I did hear, however, that the Treasury Division of Finance manages and administers the cash resources, borrowing programs, and all investment and debt management activities of the government, and that Garry Steski has managed this all since 2009.
I’m not about to pretend that I even want to have any clue about how bond markets work, but even with that admittedly bad attitude, I keep thinking – man does this guy ever know his stuff. Those numbers and ratios and percentages just fly out of his mouth with exceptional authority, and I assume with great accuracy, since no one corrects him.
Again, a lot if Steski’s testimony will be dealt with by the financial experts, but I gather that Heather Leonoff wanted him here to explain a little bit about why government debt is a bad thing. (It’s definitely a boring thing, but I guess it’s bad too.)
With apologies to Garry Steski, and all other financial experts, this is what I understood about how government bonds work.
If the Government of Manitoba wants to borrow money, it does so by issuing bonds. Banks buy these bonds and sell them to customers as investments. 85% of Manitoba’s bonds are sold in Canada, but some are sold to international investors because you can get cheaper rates. Maturity dates are staggered so that every year you have some bonds coming due and perhaps some more borrowing. For the most part, if you are in deficit for a year, you will have to borrow more.
Like the rest of us, Manitoba’s borrowing ability is tied to its credit rating, which is monitored by three agencies – Moody’s, Standard & Poor’s, and DBRS. As a general rule, you need good credit ratings in order to get good rates when you issue your bonds. And if your credit rating starts going down, you end up having to pay more.
One of the things that can get you into trouble is having your debt load be too high. Steski recounts that for a few months “last fall” (2018), they were unable to borrow money at a price the Province could live with because their credit ratings were down, and the price was too high.