THE WEEK IN REVIEW - 17 APRIL 2020
your rennie brief
what you need to know about the latest COVID-19 initiatives in canada
• In response to the anticipated disruptions caused by the spread of COVID-19, Canada’s federal government, the government of British Columbia, the Bank of Canada, and other institutions are taking steps to help mitigate the negative effects. • Each week rennie will publish a summary of the latest policy changes, financial market interventions, and other relevant actions introduced in the preceding week. • This summary includes all announcements up to 17 April 2020.
government of canada The government has announced a BUSINESS LOAN PROGRAMME EXPANSION . Companies with annual revenues between $20,000 and $1.5 million are now eligible for a loan of up to $40,000 (with the first $10,000 forgiven based on the meeting of certain conditions). Previously, only companies with revenues between $50,000 and $1 million were eligible. A new EMERGENCY COMMERCIAL RENT ASSISTANCE programme will soon be introduced to provide support through April, May and June. The final plan will require cooperation with the provinces, but Finance Minister Bill Morneau indicated that the government would be offering loans (including forgivable ones) to commercial landlords who offer rent reductions to businesses. The CANADIAN EMERGENCY RESPONSE BENEFIT (CERB) has been expanded to include those individuals earning less than $1,000 per month. This could therefore apply to up to 1.1 million workers who previously did not qualify for CERB. The new criteria also applies to anyone who is self-employed. A new commitment of $130 MILLION FOR NORTHERN COMMUNITIES to combat COVID-19 has been announced. On Tuesday Prime Minister Trudeau reiterated what BC Premier John Horgan announced last week for British Columbia: if you come back from out of country and don’t have an isolation plan, you’ll be taken to a QUARANTINE SITE . This became effective midnight, April 15. A total of $1.7 billion has been pledged to CLEAN UP ORPHAN WELLS in Saskatchewan, Alberta, and BC. The funding is expected to support 5,200 jobs. A $750 million EMISSION-REDUCTION FUND will be established to create jobs to support efforts to reduce pollution. HERITAGE CANADA will spend $500 million to help people working in arts, culture, and sports. Trudeau announced a $962 million commitment to regional development agencies and the COMMUNITY FUTURES NETWORK , which will help rural small business and businesses that don’t “have a relationship with a traditional financial institution”.
government of british columbia Provincial Health Minister Carole James indicated that additional REDUCTIONS TO THE SCHOOL PROPERTY TAX RATE FOR COMMERCIAL PROPERTIES will result in a 25% average reduction in the total property tax bill for most businesses. This would provide up to $700 million in relief. The government is also DELAYING PROVINCIAL SCHOOL TAX REMITTANCES until the end of the year. Municipal Affairs Minister Selina Robinson announced that LOCAL GOVERNMENTS CAN BORROW , interest-free, from existing capital reserves to help pay for operating expenses The $30 cancellation fee and $18 re-plating fee will be WAIVED for those who cancel their ICBC insurance during the pandemic. bank of canada At the Bank’s regularly-scheduled meeting on April 15, the OVERNIGHT TARGET INTEREST RATE was held at 0.25%, which is its “effective lower bound” (don’t expect another cut). The Bank of Canada expanded its new BOND-BUYING PROGRAMME onWednesday to include purchases on the open market of long-term provincial and corporate debt. • The purchase plan includes $50 BILLION of provincially issued bonds with remaining terms to maturity of up to 10 years. This would add to a commitment the Bank made in March to buy up to 40% of every new provincial government issue of debt with a term of no more than one year. • The Bank also announced that it will purchase up to $10 BILLION of investment-grade corporate bonds with remaining terms of up to five years. • Both programmes are aimed at easing access to and the cost of new borrowing needs brought on by the crisis, and they should be in operation by early May. It is expected they will run for 12 months, though the Bank indicated the programmes could be expanded “if conditions warrant.”
For further information please contact Ryan Berlin (rberlin@rennie.com) or Andrew Ramlo (aramlo@rennie.com). The information set out herein (the “Information”) is intended for informational purposes only. RAR & RMS has not verified the information and does not represent, warrant or guarantee the accuracy, correctness and completeness of the information. RAR & RMS does not assume any responsibility or liability of any kind in connection with the information and the recipient’s reliance upon the information. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information may change any time without notice or obligation to the recipient from RAR & RMS.
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