Federal finance minister Jim Flaherty has raised the borrowing limit for the three territories, which allows the governments more financial flexibility.
In an announcement this morning, Flaherty said the raise will likely be spent on large infrastructure projects. The debt increase has been called for by the territorial finance ministers.
The federal government has invested in the construction of an all-weather road between Inuvik, N.W.T., and Tuktoyaktuk, N.W.T. Flaherty said he won't micro-manage how territories use the new limit.
"These are decisions for the territorial government, not the government here in Ottawa. But I expect that this will help facilitate the territorial contribution to the building of the highways. You know the federal government is committed to the completion of the highway and I would hope that the territorial government would use some of this spending authority to arrive at the same place," he said.
The Government of the Northwest Territories can now borrow up to $800 million. Its previous limit was $575 million. Both the Government of Yukon and Nunavut's limits have been increased to $400 million. Yukon's previous limit was $300 million and Nunavut's was $200 million.
Michael Miltenberger, Finance Minister for the Northwest Territories, said the new limit will help the territory fund infrastructure projects.
"In these times of fiscal uncertainty with very real risks posed by external economic threats and internal cost pressures, the extra buffer between the borrowing limit and GNWT debt is welcome," Miltenberger added.
Flaherty said the federal government is open to expanding the limit in the future.
"The territories are a fabulous area of growth in Canada and we’re looking forward to facilitating that growth. [We] certainly don’t want to be in the way, so we have to make sure the borrowing limits keep pace with economic growth."
Flaherty added the increase will help Nunavut to expand its infrastructure more quickly. He said it will help with the mining sector and with the opening up of ports, in particular.
The limit increase became effective March 8.