Pursuant to subsection 28(4) of the Northwest Territories Act, subsection 27(4) of the Nunavut Act, and subsection 23(4) of the Yukon Act, a territorial government has the authority to borrow money for territorial, municipal or local purposes up to a specified limit.
The maximum amounts that may be borrowed are set by the Governor in Council, on the recommendation of the Minister of Finance, through an Order in Council for each territory. Any borrowing beyond these maximum levels requires Governor in Council approval.
Borrowings by territorial governments are charges against their own Consolidated Revenue Funds and are not supported or guaranteed by the Government of Canada. Within the established limits, territorial governments are fully accountable for their own borrowing decisions, which they make according to their own priorities and needs.
Current Borrowing Limits
Currently, the borrowing limits are $1.8 billion, $800 million, and $750 million, respectively for the Northwest Territories, Yukon and Nunavut. The Orders in Council establishing these limits are published on the website of the Office of the Privy Council.
Reviewing Territorial Borrowing Limits
The Government of Canada reviews a territorial borrowing limit following a formal request from the territorial government.
When a review is requested, the Government of Canada may change a territorial government’s maximum borrowing amount based on an assessment of the territorial government’s ability to carry future debt. This assessment is based on its economic and fiscal outlook, including federal transfer support.