Yesterday, the province announced it has reached an agreement with the Government of Canada to repay the $1.6 billion in transition funding it received when B.C. adopted the harmonized sales tax.
B.C. Finance Minister Kevin Falcon said the province will have five years to repay in full the transition funding under the new agreement. Ottawa has agreed to waive interest charges.
While the province had always acknowledged its responsibility for the repayment, its timing of the repayment remained a bone of contention.
The extended repayment schedule will save the province debt interest costs that would otherwise have been incurred had it had to pay back the full amount immediately.
The full cost of the $1.6 billion repayment will still be booked in the provincial's government's 2011-12 fiscal year, but B.C. will instead be able to flow the cash over the coming five years.
Jennifer Harrison
@JHarrisonBIV