Feds balance budget via sale of GM shares?

[Oscar]

Eyes turn to federal government’s stake in GM as a way to balance the budget despite low oil price

[ http://news.nationalpost.com/2015/02/22 ... gm-shares/ ]

Andy Blatchford, Canadian Press | February 22, 2015 3:41 PM ET

OTTAWA – The Harper government’s push to deliver a balanced budget despite the burden of low oil prices has attracted fresh attention to a potential stockpile of federal cash: a multi-billion-dollar taxpayer stake in the auto business.

The government’s remaining 73.4 million shares in General Motors are now worth more than $3.4 billion in total, thanks to the combined effect of a solid stock price and a weakened Canadian dollar.

In fact, once the Canadian exchange rate is factored in on the U.S.-priced stock, its per-share value is higher than it has been in more than five years.

The government needs to make $4 billion in proceeds from its remaining shares to break even on its initial investment, which would leave it only $600 million short if it sold the stock at current values.

Earlier this month, Ottawa became the only North American government still holding stock acquired as part of the 2009 effort to bail out the then-sputtering automaker.

Ontario’s recent sale of its last GM holdings may add to the federal government’s temptation to offload some — or all — of its own stock. The U.S. government sold the last of its stake in December 2013.

Renewed interest in Ottawa’s stash of GM shares surfaced last month as one of several possible money-generating options that could help the Conservative government live up to its promise of balancing the 2015-16 election budget.

Fulfilling the pledge will be central to Tory re-election fortunes. The government insists it will achieve a balanced budget even as lower crude prices indirectly carve billions of dollars out of federal revenues.

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