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Discussion B - OPTIONS FOR MEDIUM TERM FINANCIAL HEALTH
The following highlight challenges, opportunities and possible policy options for the medium-term.
Option 1: Index the Borrowing Limit to GDP
The Government of Yukon could negotiate with Canada to tie its borrowing limit to the Yukon economy. As the economy grows, so too does the territory's ability to manage debt and therefore so too should its borrowing limit increase. For example, a borrowing limit of 15% of GDP (gross domestic product) would be roughly equivalent to the current limit of $400 million in 2015 but would potentially increase to $485 million by 2020.
What do you think?
What pros, opportunities and benefits are associated with this option?
What cons, challenges and limitations are associated with this option?