Today, Yukon Finance Minister Dennis Fentie announced the territory will no longer invest in asset-backed commercial paper.
The decision comes amid uncertainty about the future of $36.5 million the government has wrapped up in the investments.
The funds are currently in limbo and the subject of intense negotiations among major financial players in Canada.
Though many believe a deal will be worked out to repay the investments over the next decade, or so, the details have not yet been hammered out.
News about the complex negotiation is expected in the next couple of days.
Fentie’s decision that the government is no longer going to dabble in those investments is a reversal.
Initially, he suggested its investment strategy had paid big dividends, and this loss wouldn’t change the government’s approach.
Apparently, something has changed.
We suggest it’s a federal audit of the Yukon government’s investment practices.
In 10 days, Sheila Fraser will release details of her probe into the asset-backed commercial paper investments.
Because the government’s investment practices failed to follow the letter of the Yukon Financial Administration Act, and put at risk more than one-third of the government’s rainy-day fund, it’s expected Fraser will be sharply critical of the government’s former investment practices.
Today, Fentie ordered them changed.
This lends credence to suspicions Fraser will criticize the government.
Now Fentie will deflect any criticism Fraser delivers next week — the Yukon government has already dealt with that, he’ll say.
Of course, today’s decision won’t recover the $36.5 million put at risk under his watch.
And, for the moment, Yukoners will just have to hope the financial deal being negotiated works out.
Every day that the negotiation drags on costs the territory money in lost interest.
Those losses could add up to more than $100,000 by the time the financial restructuring is completed. If it’s completed at all, of course.
So, Fentie’s decision to abandon risky investments should protect the territory’s finances in the future.
And that’s the best news citizens could hope for. (RM)