It was 1978. Saskatchewan was at the peak of an economic cycle when Canadian Business magazine featured the province on its cover. A caricature of Premier Allan Blakeney standing in front of a bulging grain elevator overflowing with money under the headline: Saskatchewan, the New Kuwait.
That feature is timely today in light of Ottawa’s plan for a sovereign wealth fund. The concept is not especially new. Norway has one. So do Alaska and Alberta. Saskatchewan had one. Created in 1978, it lasted fifteen years.
Excess or, as they called them at the time, windfall resource revenues were set aside in a rainy-day fund.
In Saskatchewan’s case, the money – more than a billion dollars – was loaned to quasi-government agencies like Crown Corporations. When commodity prices fell in subsequent years, these agencies were also squeezed and didn’t have the capacity to repay the loans when the treasury needed them.
Lending to yourself is not really a rainy-day account – balancing investments in counter-cyclical vehicles and taking only interest or dividends into income makes more sense. Like Norway does not how Saskatchewan did it.
