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Government of Newfoundland and Labrador
Office of the Premier

Labrador

March 20, 2020

The Right Honourable Justin Trudeau
Prime Minister of Canada
Office of the Prime Minister

80 Wellington Street
Ottawa. ON K1A0A2
Dear Prime Minister Trudeau:

Thank you for your March 9,2020 letter regarding Canada's readiness for COVID-19. 1 appreciate
you, and the Deputy Prime Minister, reaching out and continuing to show national leadership on
this critical public health issue. The Government of Newfoundland and Labrador agrees that the
health, safety, and wellbeing of all Canadians is a top priority. I appreciate the federal
government's proactive engagement on this rapidly evolving global pandemic.
The Government of Newfoundland and Labrador has taken the COVID-19 pandemic very
seriously and we have acted quickly to implement a comprehensive response to this escalating
situation. We continue to follow the advice of medical experts and are responding in real time to
the crisis. Most recently, the Government of Newfoundland and Labrador declared a public health
emergency and announced some of Canada's strictest measures aimed at slowing the spread
COVID-19.

With more than 21% of our population aged 65 or older, and 84% of these having at least one
chronic disease, it is critically Important that we focus on containing the spread of COVID-19 in
this Province. We are even more severely impacted as this is the time of year we have a rebound
in influenza cases, thus placing additional challenges on our health care sector. We will continue
to work closely with medical experts, the provincial emergency operation centre, and the joint
public health response committee to ensure the health and safety of all Newfoundlanders and
Labradorians.

As discussed during our recent teleconferences, Newfoundland and Labrador had already
entered 2020 in a difficult situation. As highlighted in discussions regarding changes to the Fiscal
Stabilization Program, the Province has never fully recovered from the 2015-16 downturn in the
economy when royalty revenues declined by over $1 billion. As the following chart illustrates, the
net debt to GDP ratio, which is the highest in the country, has been trending upwards.

...12

P.O. Box 8700, St. John's, NL, Canada A1B4J6 1709.729.3570 f 709.729,5875

 2014-15

2015-16

2016-17

2017-18

2018-19

2019-20*

Net debt to
GDP

30%

40%

43%

45%

46%

41%

Reflects accoun

ing treatment of

he Hibemia bac <ed

dividend agreement

The anticipated impact of COVID-19, the January snowstorm and resulting State of Emergency,
and the collapse of oil prices on the Newfoundland and Labrador economy in 2020 will be
unprecedented. Newfoundland and Labrador is a small, resource-based economy with exports
accounting for 60% of its GDP. A global recession will lower demand for the province's key exports
of fish, oil, newsprint, and minerals, and will significantly impact production, employment, and
income levels in those industries. Oil prices have plummeted to historic lows and construction
activity on Muskrat Falls and the Vale underground mine has been suspended. The fishery, which
is the backbone of our rural employment,faces a very uncertain season. The immediate impacts
on air transportation, accommodations, food and beverage establishments, and recreation
facilities as a result of social distancing measures being implemented are also unprecedented.
Prime Minister, while you have indicated that Canada has the fiscal capacity to respond to this
crisis, Newfoundland and Labrador is not in the same situation. Like all provinces and territories,

we are cognizant of the short term and long term economic and fiscal impacts. We acknowledge
the benefit of the federal response to date. However, I must bring to your attention the immediate
and urgent financial crisis that Newfoundland and Labrador is facing. To put it bluntly, our recent
attempts to finalize our borrowing program, both short term and long term, have been
unsuccessful. We have no other recourse to raise the necessary funds to maintain the operations
of government, including our health care system, especially at this critical time.
While all provinces are having challenges, our particular situation is driven by our lack of fiscal
capacity before the crisis and is now compounded by the collapse of oil prices and the COVID-19
pandemic.

As expressed to Minister Morneau and to Deputy Prime Minister Freeland, our Province has run
out of time. Your attention is urgently required.

iincerely.

□WIGHT BALL
Premier