A request to increase the GNWT's borrowing limit has been submitted to Ottawa as the territorial government is on pace exceeded its current debt limit. 

Finance Minister Caroline Wawzonek gave an update on the fiscal state of the territory during the legislative session Oct. 18.

"We've been trimming longstanding unfilled public service positions, consolidating programs that were inefficiently split between departments, and identifying underspent funds that could be reduced from our budget. We are well underway with the fleet management program and a lease space review," she said. "However, despite these efforts, the fiscal situation facing the Government of the Northwest Territory is dire. Despite the hard work departments have done to find value for money, the actions taken under our fiscal sustainability strategies have not been enough to absorb the multiple fiscal challenges that have arisen since the tabling of the 2024-2025 main estimate.

"Efforts to maintain the resiliency of the energy grid, rising costs within the health system and wildfire expenditures have resulted in our total debt being projected to reach $1.74 billion as a result. We will reach the $120 million buffer below the federally-imposed $1.8 billion limit. We are therefore in the process of requesting a borrowing limit increase from the Government of Canada. Requesting a borrowing limit increase is necessary to ensure we have the capacity to respond to expenditure shocks that have become more frequent."

Wawzonek said the GNWT entered the fiscal year with a $294-million surplus, which it had intended to put towards short-term deficit. However, things did not work out that way.

A huge factor in the GNWT's financial woes is climate change. The low water on the Mackenzie River has disrupted barge services, driving costs up exponentially and costing Marine Transportation Services an additional $14 million. The severely low water levels have also forced the use of diesel to make up for the lack of hydroelectric power generation. On its own, Northwest Territories Power Corporation needs to borrow another $75 million just to break even.

Looking forward, Wawzonek said the GNWT needs to continue to find cost savings in its departments and must address the healthcare system to ensure it is sustainable.

"This work is being led by the healthcare system sustainability unit within the Department of Executive and Indigenous Affairs," said the Finance minister. "They are taking an evaluative approach to health and social services systems, focusing on determining sustainable service levels and exploring opportunities for greater efficiency."

In spite of the GNWT's budget woes, Wawzonek said the overall economy has recovered from the shocks of the Covid-19 pandemic. She noted that mineral exploration investments and appraisal spending intentions are up 27 per cent, though also cautioned that exploration does not guarantee future mines.

She also cautioned that GDP will contract this year due to declining activity in the mining sector.