Provincial government helps lower interest costs for municipalities

Alberta Municipalities extends its appreciation to the Government of Alberta for changing its policy on how it sets interest rates on loans for local infrastructure projects.

What was the former policy?

In December 2021, the Government of Alberta began setting loan rates for local authorities at a rate that was similar to what a major city could access in the bond market. That decision increased the loan rates for municipalities by an average of 0.5 to 0.75 of one per cent, adding millions of dollars of interest costs for municipal governments who needed to borrow funding to build or repair local infrastructure.

What is the new interest rate policy?

The interest rates for all new loans to local authorities will be based on the current estimated rate that the Government of Alberta can obtain in the market, which is lower.

Premier Smith announced the policy change at ABmunis’ 2024 Convention in late September. The new policy took effect April 1, 2025.

The provincial government’s decision was made in direct response to our advocacy on this issue through a resolution passed by our members in September 2023. We are pleased that our conversations with Premier Danielle Smith, President of Treasury Board and Minister of Finance Nate Horner, and Minister of Municipal Affairs Ric McIver led to this decision. This important change will benefit property taxpayers in many communities for decades to come.

Learn more about capital financing through the Government of Alberta.