Province Of Manitoba 18-K Annual report (foreign governments)

PROVINCE OF MANITOBA

          This description of Province of Manitoba is dated as of October 29, 2003 and appears as Exhibit 99.3 to the Province of Manitoba’s Annual Report on Form 18-K to the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2003.

TABLE OF CONTENTS

FURTHER INFORMATION
SUMMARY
PROVINCE OF MANITOBA
	General Information
	Constitutional Framework
	Provincial Government
ECONOMY
	General
	Economic Structure
	Merchandise Exports
	Capital Investment
	Labor Force
GOVERNMENT FINANCES
	Revenue
	Expenditure
SUMMARY FINANCIAL STATEMENTS
CROWN ORGANIZATIONS AND GOVERNMENT ENTERPRISES
PUBLIC DEBT
	Debt Record
	Direct Funded Debt of the Province
	Guaranteed Debt of the Province
	Maturity Schedule
	Sinking Funds
	Unfunded Debt
	Consolidated Funded Debt of the Manitoba Public Sector
	Selected Debt Information
	Pension Liability
THE MANITOBA HYDRO-ELECTRIC BOARD
	Operations
	Rate Matters
	Statistical Information
	Construction Program
	Export Power Sales
CANADIAN FOREIGN EXCHANGE
TABLES OF SUPPLEMENTARY INFORMATION
EX-99.3

      This document (otherwise than as part of a prospectus contained in a registration statement filed under the Securities Act of 1933) does not constitute an offer to sell or the solicitation of an offer to buy any Securities of the Province. The delivery of this document at any time does not imply that the information herein is correct as of any time subsequent to its date.

TABLE OF CONTENTS

		Page
Further Information			2
Summary			3
Map of the Province of Manitoba			4
Province of Manitoba			5
	General Information		5
	Constitutional Framework		5
	Provincial Government		5
Economy			6
	General		6
	Economic Structure		7
	Merchandise Exports		12
	Capital Investment		14
	Labor Force		14
	Energy		15
Government Finances			16
	Revenue		20
	Expenditure		22
Summary Financial Statements			23
Crown Organizations and Government Enterprises			24
Public Debt			26
	Debt Record		26
	Direct Funded Debt of the Province		26
	Guaranteed Debt of the Province		27
	Maturity Schedule		28
	Sinking Funds		28
	Unfunded Debt		28
	Consolidated Funded Debt of the Manitoba Public Sector		29
	Selected Debt Information		30
	Pension Liability		30
The Manitoba Hydro-Electric Board			31
	Operations		32
	Rate Matters		33
	Statistical Information		34
	Construction Program		35
	Export Power Sales		37
Canadian Foreign Exchange			39
Tables of Supplementary Information			40

FURTHER INFORMATION

      This document appears as an exhibit to Manitoba’s Annual Report to the U.S. Securities and Exchange Commission on Form 18-K for the fiscal year ended March 31, 2003. Additional information with respect to Manitoba is available in such Annual Report, in the other exhibits to such Annual Report and in amendments thereto. Such Annual Report, exhibits and amendments can be inspected and copied at the public reference facilities maintained by the Commission at: Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such documents may also be obtained at prescribed rates from the Public Reference Section of the Commission at its Washington address or, without charge, from Province of Manitoba, Department of Finance, Treasury Division, Room 9, Legislative Building, Winnipeg, Manitoba R3C 0V8, Canada.

      In this document, unless otherwise specified or the context otherwise requires, all dollar amounts are expressed in Canadian dollars (“$” or “C$”) and all references to “dollars” are to Canadian dollars. See “Canadian Foreign Exchange” for information regarding the rates of conversion of U.S. dollars into Canadian dollars.

      At October 28, 2003, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.3107.

      Totals in the statistical tables set forth in this document may not add due to rounding.

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SUMMARY

The following information is qualified in its entirety by the more

detailed information in this document.

PROVINCE OF MANITOBA

																	Compound
		Year Ended December 31,															Annual
Economy																	Growth Rate
		1998			1999			2000			2001			2002			1998-2002
		(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product			$30,994			$31,934			$33,840			$35,065			$36,704			4.3	%
Change in Real Gross Domestic Product
	Manitoba		4.3	%		1.7	%		3.6	%		1.3	%		2.0	%		—
	Canada		4.1			5.5			5.3			1.9			3.3			—
Manufacturing Shipments			$10,372			$10,656			$11,344			$11,466			$11,538			2.7
Farm Cash Receipts			2,962			2,959			3,178			3,691			3,827			6.6
Capital Investment			5,000			5,186			5,198			5,591			5,680			3.2
Personal Income			26,312			26,964			28,964			29,396			30,335			3.6
Population at July 1 (in thousands)			1,138			1,143			1,147			1,151			1,156			0.4
Average Unemployment Rate			5.5	%		5.6	%		4.9	%		5.0	%		5.2	%		—
Change in Consumer Price Index (Manitoba)			1.3			1.9			2.5			2.6			1.6			—
Average Exchange Rate (C$ per U.S.$)			1.4831			1.4858			1.4852			1.5484			1.5704			—

	Year Ending March 31,
Government Finances —									Budget
Operating Fund									Estimate
	2000		2001		2002		2003		2004
	(In millions of dollars)
Revenue including Fund Transfers (1)		$6,522.5		$6,752.0		$6,896.8		$7,044.3		$7,361.9
Expenses including Fund Transfers (1)		6,511.7		6,711.2		6,833.5		7,039.7		7,352.2
Budgetary Surplus		$10.8		$40.8		$63.3		$4.6		$9.7

Net Direct Funded and Guaranteed		As of March 31,
Debt
		1999			2000			2001			2002			2003
		(In millions of dollars)
Consisting of
	Net Direct Funded Debt		$12,797			$13,218			$13,765			$13,833			$13,601
	Net Provincial Guaranteed Debt		601			241			391			570			953
			$13,398			$13,459			$14,156			$14,403			$14,554
Issued for
	General Government Programs		$6,774			$6,718			$6,798			$6,651			$6,650
	Self-Sustaining Purposes		6,624			6,741			7,358	(2)		7,752	(2)		7,904	(2)
			$13,398			$13,459			$14,156			$14,403			$14,554
General Government Programs Debt as a Percentage of Nominal Gross Domestic Product			21.9	%		21.0	%		20.1	%		19.0	%		18.1	%

     (1) Includes transfers from Fiscal Stabilization Fund and to the Debt Retirement Fund. See “Government Finances.”

     (2) Includes refinancing of hospital facilities debt and The Manitoba Lotteries Corporation debt, which was previously incurred directly by those entities and was an indirect obligation of the Province.

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LOGO

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PROVINCE OF MANITOBA

General Information

      The Province of Manitoba is located in the center of Canada, north of the States of Minnesota and North Dakota. It is the most easterly of the three Provinces of Manitoba, Saskatchewan and Alberta, which together constitute the Prairie Region of Canada. Manitoba is bounded on the east by the Province of Ontario, on the north by Hudson Bay and the Territory of Nunavut, and on the west by the Province of Saskatchewan. The Province has 400 miles of northern coastline bordering on Hudson Bay. The only seaport in the Prairie Region is located at Churchill on Hudson Bay.

      Of Manitoba’s total area of 251,000 square miles, 39,000 square miles are lakes and rivers and 163,000 square miles are lands owned by the Province. Cultivated land comprises 30,000 square miles in the southern part of the Province. The northern part of the Province, which is part of the Canadian Shield, is composed largely of timberlands and extensive areas of mineralized rock structure.

      The estimated population of Manitoba on July 1, 2003 was 1,162,800, of whom approximately 685,000 lived in Winnipeg, the capital of the Province. Winnipeg has a diversified economic base with significant activity in a variety of manufacturing and service sectors. The city is also a major rail, truck and air transportation hub by virtue of its geographical position in the center of the continent.

      The second largest city in the Province is Brandon, with a population of approximately 40,000. Brandon, in western Manitoba, is a major supply center for the agriculture industry, as well as an agriculture-related manufacturing center.

Constitutional Framework

      Canada consists of a federation of provinces and Federal territories. A constitutional division of powers between the Federal and provincial governments was established by the British North America Act, 1867, an Act of the Parliament of the United Kingdom. By later enactments, including the Constitution Act, 1982, the power to amend the Constitution of Canada (the “Constitution”) was transferred to Canada.

      Under the Constitution, the Provinces are assigned jurisdiction over health care, education, municipal institutions, property and civil rights, natural resources and other matters of purely provincial or local concern. Each Province has exclusive jurisdiction over the borrowing of money on the sole credit of that Province. The Parliament of Canada has jurisdiction over all areas not assigned exclusively to the provincial legislatures, including such matters as aboriginal persons, the federal public debt and property, the regulation of trade and commerce, currency and coinage, banks and banking, national defense, foreign affairs, postal services, interprovincial transportation and communications undertakings.

      Various Constitutional issues have been under discussion in Canada for a number of years. On August 20, 1998, in response to a reference from the Federal Government, the Supreme Court of Canada ruled that under the Constitution of Canada and international law, Quebec may not secede unilaterally from Canada, but that if the people of Quebec voted to secede by a clear majority vote on a clear question, the other Provinces and the Federal Government would be obliged to enter negotiations with Quebec with respect to secession, such negotiations to be guided by constitutional principles, including federalism, democracy, constitutionalism and the rule of law, and the protection of minorities.

Provincial Government

      The Provincial Government has general responsibility for the administration of all governmental activities and functions within Manitoba, other than those which are under the jurisdiction of the Federal Government. It carries out certain of these responsibilities through Provincial agencies, boards, commissions and Crown organizations. Certain other responsibilities

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have been delegated to municipalities and semi-autonomous bodies such as school boards and regional health authorities.

      The executive power in the Province of Manitoba is vested in the Lieutenant Governor acting on the advice of the Executive Council, which is responsible to the Legislative Assembly. The Lieutenant Governor is appointed by the Governor General of Canada in Council.

      The Executive Council, which includes the Premier and Ministers of Departments of the Provincial Government, is appointed by the Lieutenant Governor usually on the nomination of the leader of the party with the largest number of members in the Legislative Assembly. Members of the Executive Council are usually members of the Legislative Assembly.

      The Legislative Assembly has 57 members who are elected for a term of five years subject to earlier dissolution of the Assembly by the Lieutenant Governor, usually on the recommendation of the Executive Council. In the latest general election of members of the Legislative Assembly, held on June 3, 2003, the New Democratic Party was elected to a majority of seats.

      The following table sets forth the results of the three most recent elections of the Province.

	1995		1999		2003
New Democrat		23		32		35
Progressive Conservative		31		24		20
Liberal		3		1		2
Total		57		57		57

ECONOMY

General

      Manitoba has a diversified economy. Its major industries are manufacturing, real estate, transportation and storage, wholesale and retail trade, construction and communication. The largest components of manufacturing are food processing, transportation equipment, machinery, fabricated metals; wood; furniture; chemicals; plastics; and printing. Agricultural production is diversified between crops and livestock. In transportation, Manitoba is a major center for truck, rail and air transport, and there is a deep-sea port at Churchill on Hudson Bay. The Province exports a large portion of its production.

      The following table sets forth growth rates in 2002 for key economic indicators and selected sectors of the economy for Manitoba and Canada, as well as the unemployment rate for 2002.

	Manitoba			Canada
Single-Detached Housing Starts		22.6	%		30.6	%
Retail Sales		7.2			6.0
Manufacturing Shipments		0.6			1.9
Gross Domestic Product		4.7			4.6
Real Gross Domestic Product		2.0			3.3
Capital Investment		1.6			2.0
Foreign Merchandise Exports		-3.0			-2.6
Farm Cash Receipts		3.7			-1.5
Value of Mineral Production		-4.0			-7.3
Consumer Price Index		1.6			2.2
Employment		1.6			2.2
Average Unemployment Rate		5.2			7.7

      Year-to-date data for 2003 indicate that single detached housing starts, retail sales and manufacturing shipments are increasing while foreign merchandise exports and utilities sales are decreasing. Farm cash receipts are unchanged from 2002. According to the July 2003 Statistics Canada survey of investment intentions, capital investment is expected to increase by 1.7% to $5.8 billion as public investment increases 8.7% while private investment decreases 0.6%.

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      The following table sets forth selected indicators of economic activity and the compound annual growth rates for Manitoba and Canada for the years 1998 through 2002. In this table and throughout this document, compound annual growth rates are calculated by distributing the aggregate amount of growth during the period on the basis of a constant annual rate of growth compounded annually.

SELECTED ECONOMIC INDICATORS

																		Compound
																		Annual
			Year Ended December 31,															Growth
																		Rate
			1998			1999			2000			2001			2002			1998-2002
			(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product (1)
	Manitoba			$30,994			$31,934			$33,840			$35,065			$36,704			4.3	%
	Canada			884,553			949,209			1,048,111			1,077,851			1,127,560			6.3
Real Gross Domestic Product
	Manitoba (2)			$31,036			$31,573			$32,705			$33,134			$33,801			2.2
		Change		4.3	%		1.7	%		3.6	%		1.3	%		2.0	%		—
	Canada (2)			$918,910			$969,750			$1,020,786			$1,040,388			$1,074,516			4.0
		Change		4.1	%		5.5	%		5.3	%		1.9	%		3.3	%		—
Personal Income				$26,312			$26,964			$28,497			$29,396			$30,335			3.6
Personal Income Per Capita (in Dollars)				23,121			23,591			24,845			25,540			26,241			3.2
Retail Sales				8,773			9,026			9,396			9,937			10,649			5.0
Capital Investment				5,000			5,186			5,198			5,591			5,680			3.2
Single-Detached Housing Starts (Units)				2,368			2,231			2,348			2,460			3,016			6.2
Change in Consumer Price Index
	Manitoba			1.3	%		1.9	%		2.5	%		2.6	%		1.6	%		—
	Canada			0.9			1.7			2.7			2.6			2.2			—
Population (July 1) (in thousands)
	Manitoba			1,138			1,143			1,147			1,151			1,156			0.4
	Canada			30,157			30,404			30,689			31,021			31,362			1.0
Employment (in thousands)				535.7			542.7			554.4			557.9			567.0			1.4
Average Unemployment Rate				5.5	%		5.6	%		4.9	%		5.0	%		5.2	%		—
Average exchange rate (C$ per U.S.$)				1.4831			1.4858			1.4852			1.5484			1.5704			—

(1)	At market prices.
(2)	Expressed in 1997 dollars.

Sources: Statistics Canada, Manitoba Bureau of Statistics and Manitoba Department of Finance.

Economic Structure

      The Province has a diversified economy. In 2002, goods producing industries accounted for 27.6% of real gross domestic product at basic prices. Manufacturing accounted for 12.9% of real gross domestic product at basic prices, construction for 5.0% and agriculture for 4.5%. The commercial service sector accounted for 53.1% of real gross domestic product at basic prices, and the non-commercial service sector for 19.3%.

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      The following table sets forth the Real Gross Domestic Product by industry at basic prices and the compound annual growth rates for the years 1998 through 2002.

REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES BY INDUSTRY (1)

													Compound
													Annual
			Year Ended December 31,										Growth
													Rate
			1998		1999		2000		2001		2002		1998-2002
			(In millions of 1997 dollars)
Goods Producing Industries
	Manufacturing			$3,826		$3,662		$3,971		$3,952		$4,021		1.3	%
	Construction			1,400		1,358		1,216		1,550		1,547		2.5
	Agriculture			1,454		1,446		1,585		1,353		1,397		-1.0
	Utilities			1,030		972		1,004		1,007		959		-1.8
	Mining			615		543		664		663		601		-0.6
	Forestry, Fishing and Trapping			67		92		98		98		100		10.5
Total Goods Producing Industries				8,391		8,073		8,538		8,623		8,624		0.7
Service Producing Industries
	Commercial Services
		Finance, Insurance and Real Estate		2,919		3,010		3,169		3,291		3,407		3.9
		Owner-Occupied Dwellings (2)		2,637		2,680		2,720		2,754		2,863		2.1
		Transportation and Storage		1,922		2,062		2,110		2,057		2,027		1.3
		Wholesale Trade		1,782		1,839		1,872		1,874		2,010		3.1
		Retail Trade		1,559		1,682		1,762		1,818		1,928		5.5
		Information and Culture		1,151		1,191		1,288		1,343		1,421		5.4
		Accommodation, Food and Beverage		692		689		773		777		777		2.9
		Professional and Scientific		712		827		764		765		759		1.6
		Business Services		415		480		451		469		499		4.7
		Other Services		801		779		830		863		877		2.3
	Total Commercial Services Industries			14,589		15,238		15,738		16,013		16,569		3.2
	Non-commercial Services
		Health and Welfare		2,095		2,163		2,179		2,183		2,233		1.6
		Education		1,492		1,540		1,546		1,544		1,536		0.7
		Federal Administration		938		930		958		968		961		0.6
		Provincial Administration		657		700		720		732		730		2.7
		Municipal Administration		508		520		532		546		570		2.9
	Total Non-commercial Services Industries			5,689		5,854		5,936		5,972		6,030		1.5
Total Service Producing Industries				20,279		21,092		21,673		21,984		22,599		2.7
Real Gross Domestic Product at Basic Prices				$28,670		$29,165		$30,211		$30,607		$31,223		2.2

     (1) Real gross domestic product measures value added and therefore differs from the value of production or the value of shipments by industry. Real gross domestic product at basic prices is the sum of all factor incomes from production in the Province. Real gross domestic product at basic prices plus indirect taxes, minus subsidies, equals real gross domestic product at market prices. Amounts in the table are expressed in 1997 dollars.

     (2) Is imputed rent value of Owner-Occupied Dwellings.

Source: Manitoba Bureau of Statistics.

     Manufacturing. Manufacturing is the largest sector of the Manitoba economy and is well diversified with the four largest industries accounting for only 55.5% of the value of total shipments in 2002.

      The largest industry, food, accounts for 26.2% of total shipments, and produces a broad range of products. The next largest industries are: transportation equipment, primarily buses and aerospace equipment (13.9% of shipments); machinery, mainly agricultural implements (9.0% of

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shipments); and furniture (6.4% of shipments). The remaining industries range in size from 6.1% to 1.6% of shipments.

      In 2002, manufacturing shipments increased 0.6% due to increased production in the clothing, furniture and machinery industries.

      The following table sets forth the gross value of manufacturing shipments and the compound annual growth rates of the principal Manitoba manufacturing industries for the years 1998 through 2002.

GROSS VALUE OF MANUFACTURING SHIPMENTS

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1998		1999		2000		2001		2002		1998-2002
		(In millions of dollars)
Non-durables
	Food		$2,136.5		$2,469.5		$2,812.3		$2,899.0		$3,023.3		9.1	%
	Chemicals		464.8		507.9		566.2		704.4		615.6		7.3
	Plastics		389.6		452.5		448.8		472.8		508.1		6.9
	Printing		393.1		410.8		424.1		466.5		436.5		2.7
	Beverages		227.2		204.1		215.1		197.1		194.3		-3.8
	Other Non-durables		594.4		592.3		655.6		620.8		603.0		0.4
Durables
	Transportation Equipment		1,626.9		1,617.7		1,488.0		1,599.9		1,602.9		-0.4
	Machinery		1,347.3		1,050.5		1,031.5		952.3		1,041.9		-6.2
	Furniture		484.3		505.9		574.3		667.3		742.9		11.3
	Fabricated Metals		543.6		710.6		757.7		721.5		707.0		6.8
	Wood		421.0		476.1		645.7		579.4		501.1		4.5
	Clothing		368.3		364.9		372.3		333.0		376.5		0.6
	Electrical and Electronics		172.6		184.0		241.0		214.9		183.4		1.5
	Other Durables		1,203.0		1,109.6		1,111.8		1,036.7		1,000.1		-4.5
Total			$10,372.5		$10,656.3		$11,344.4		$11,465.6		$11,537.5		2.7

Source: Statistics Canada.

     In the first eight months of 2003, the value of manufacturing shipments increased 0.8% compared to the first eight months of 2002. The increase is principally due to a 23.2% increase in chemical products and a 20.1% increase in fabricated metals. Overall, six of fourteen categories of manufacturing shipments reported increases.

      Agriculture. Farm cash receipts are divided between crops and livestock and are well diversified within these major sectors of production.

      In 2002, farm cash receipts increased 3.7%. Crop receipts increased 23.5% due to increased receipts from all major crops primarily reflecting higher prices and production volumes. Livestock receipts decreased 3.4% with hog receipts decreasing 6.7% and cattle and calves receipts decreasing 3.9%. All other types of livestock receipts increased. Direct payments decreased 42.7%.

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      The following table sets forth farm cash receipts and the compound annual growth rates for the years 1998 through 2002.

FARM CASH RECEIPTS

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1998		1999		2000		2001		2002		1998-2002
		(In millions of dollars)
Crops
	Wheat		$469.1		$493.9		$447.3		$586.3		$630.2		7.7	%
	Oilseeds		715.7		394.4		371.4		416.1		576.1		-5.3
	Specialty and Forage		145.4		149.4		174.6		156.2		213.9		10.1
	Other Grains		119.3		107.1		117.8		193.5		212.0		15.5
	Vegetables		160.0		175.1		174.6		202.0		205.0		6.4
	Other (1)		34.6		94.8		36.2		-23.4		53.8		11.7
Total Crops			1,644.2		1,414.5		1,322.0		1,530.8		1,891.0		3.6
Livestock
	Hogs		396.4		482.3		676.1		765.7		714.5		15.9
	Cattle and Calves		454.8		462.0		485.7		578.5		555.7		5.1
	Dairy		145.9		152.3		154.0		158.0		163.9		3.0
	Poultry and Eggs		123.1		126.4		143.8		151.9		152.8		5.6
	Other Livestock		105.2		105.5		109.3		124.3		130.6		5.6
Total Livestock			1,225.4		1,328.5		1,568.9		1,778.4		1,717.5		8.8
Direct Payments			92.1		216.0		287.1		382.1		219.0		24.2
Total			$2,961.7		$2,959.1		$3,178.0		$3,691.3		$3,827.4		6.6
Net Cash Income (2)			$606.1		$614.2		$649.7		$982.4		$1,098.4		16.0

     (1) Includes other crops, and, as a negative amount, deferred payments on all crops.

     (2) Represents farm cash receipts less operating expenses.

Source: Statistics Canada.

     In 1999, 2000 and 2001, Direct Payments include payments under the temporary disaster income assistance programs for farm producers implemented by the provincial and Federal governments in respect of poor weather conditions in the Province. These weather conditions prevented or delayed crop seeding in some regions. These payments were $108.9 million in 1999, $48.1 million in 2000 and $117.6 million in 2001. Direct Payments in 2000 also include a one-time $100 million payment to crop producers to compensate them for the elimination of transportation subsidies.

      On May 20, 2003, the Canadian Food Inspection Agency (“CFIA”) announced that tests had confirmed that a case of Bovine Spongiform Encephalopathy (“BSE”) had been found in a single beef cow in the Province of Alberta. The inspection system prevented the meat from entering the food chain. More than 2,700 animals were destroyed and tested as part of the CFIA’s investigation, which is now concluded. All test results for BSE were negative and the investigation did not identify any additional cases.

      On May 20, 2003, the United States Department of Agriculture (“USDA”) placed Canada under its BSE restriction guidelines and announced that it would not accept any live ruminants (cattle, sheep and certain other hoofed animals) or ruminant products from Canada pending further investigation. Several other countries also imposed import restrictions. On August 8, 2003, the USDA announced that it would begin to accept applications for import permits for certain boneless ruminant products, including boneless bovine meat from cattle under 30 months of age. Several other countries have followed the U.S. and are allowing the import of certain Canadian

10

beef products. However, the Canada-U.S. border remains closed to live ruminants and other ruminant products.

      The closure of the Canada-U.S. border to Canadian ruminants and ruminant products has adversely impacted the Canadian ruminant industry. The Canadian Government and certain provincial governments, including the Government of Manitoba, announced various programs to provide support to the industry. Discussions between the United States and Canada continue concerning the development of rules to allow for the resumption of the importation of live ruminants into the United States.

      In the first six months of 2003, farm cash receipts were unchanged from the same period in 2002. Crop cash receipts increased 6.1%, primarily due to higher production volumes and prices, with the increases occurring across all the major crop categories except vegetables and other grains. Livestock cash receipts decreased 6.5% with cattle and calves decreasing 25.2%. Hog receipts increased 1.8%. Direct Payments increased $7.5 million or 8.5%.

      In 2003, crop production volumes are expected to be significantly above 2002 levels, which should lead to higher production values as the drought conditions that affected large parts of the North American plains were not as severe in Manitoba. The value of livestock production in Manitoba is expected to decline as a result of the BSE situation.

      Minerals. The principal metals produced in Manitoba are nickel, zinc, copper, and gold. Other metals include cobalt, tantalum, platinum and silver. Industrial minerals produced consist principally of sand and gravel, peat moss, stone, and lime.

      The two companies with the largest mining operations in Manitoba, accounting for approximately 65% of all mineral production, are Inco Limited, which produces mainly nickel, copper and cobalt, and Hudson Bay Mining and Smelting Co., Limited, which produces mainly copper and zinc.

      In 2002, the total value of mineral production in Manitoba decreased 4.0% to $982 million. The value of metal production decreased 7.3% in 2002 as a result of lower production volumes offsetting price increases for nickel. Nickel accounted for 40% of the total value of mineral production in 2002. The value of zinc and copper production declined as a result of lower production volumes and lower prices. The value of petroleum production increased 10.5%, reflecting higher prices, while the value of industrial mineral production increased 1.9%.

      The following table sets forth the gross value of mineral production and the compound annual growth rates for the years 1998 through 2002.

GROSS VALUE OF MINERAL PRODUCTION

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1998		1999		2000		2001		2002		1998-2002
		(In millions of dollars)
Metals
	Nickel		$341.7		$277.1		$561.6		$412.2		$397.6		3.9	%
	Zinc		142.1		139.0		133.8		129.3		109.0		-6.4
	Copper		121.8		122.4		129.9		97.1		92.8		-6.6
	Gold		118.1		111.4		95.0		86.3		83.6		-8.3
	Other Metals		84.7		78.0		68.9		66.5		51.0		-11.9
Total Metals			808.4		727.9		989.3		791.5		734.0		-2.4
Petroleum			73.9		96.6		165.3		138.2		152.6		19.9
Industrial Minerals			84.7		82.7		79.5		93.6		95.4		3.0
Total			$967.1		$907.1		$1,234.1		$1,023.3		$982.0		0.4

Sources: Statistics Canada and Manitoba Department of Energy and Mines.

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     Overall mining values are expected to remain stable in 2003. Production volumes for all metals except gold are expected to have slight increases in 2003 and U.S. dollar prices are higher for all metals including gold in the year to date. However, the lower exchange rate of the U.S. dollar has offset these gains and should result in the overall production value remaining stable. The Ruttan Lake copper and zinc mine was closed in the spring of 2002. The Bissett gold mine discontinued production in September 2001 and remains in a care and maintenance mode.

      Services. The service sector comprises a wide range of activities including transportation, finance, trade, tourism and personal services. From 1998 through 2002, commercial service industries accounted for 48.6% of average total employment in Manitoba, and non-commercial (primarily publicly funded) services accounted for 25.5%.

      Winnipeg is an air, rail and trucking hub, connected to Canadian and international markets. Both of Canada’s national railways pass through Winnipeg where they have large operations. Several of Canada’s largest trucking firms are headquartered in Manitoba. Because Winnipeg International Airport is one of the few that does not have nighttime landing restrictions, and is centrally located in North America, it is a major hub for courier services.

      Commodity trading and financial services are important components of Winnipeg’s economy. In particular, the city is the center of Canada’s grain trade. The Canadian Wheat Board is located in Winnipeg. The Winnipeg Commodity Exchange is the only commodity exchange, and the second largest futures exchange, in Canada. Nine grain companies have their head office or Canadian head office in Winnipeg. Winnipeg is also the headquarters of Canada’s largest mutual fund company, Investors Group, and of one of the largest life insurance companies, Great-West Lifeco Inc.

      Manitoba’s central location, low-cost office space and multilingual labor force have contributed to the expansion of call centers (telemarketing and customer service centers) in the Province. Data processing and engineering are important extra-provincial export-oriented industries. Winnipeg is the headquarters for Canwest Global Communications Corp., one of the largest media companies in Canada.

      Winnipeg serves as a regional shopping center for all of southern Manitoba. In 2002, retail sales in Manitoba increased 7.2% to $10.6 billion. In the first eight months of 2003, retail sales increased 1.8% compared to the same period of 2002.

      The Province has a well-developed tourism industry. As a result of Manitoba’s central location, the Province attracts national and international convention activity. Winnipeg serves as a regional entertainment center for portions of North Dakota, Minnesota and northwestern Ontario. Manitoba has an excellent resource base for outdoor recreational activities and has many public and private tourism facilities. In 2002, estimated tourism expenditures by both residents of Manitoba and visitors increased by 8.9% to $1,402 million.

Merchandise Exports

      In 2002, total merchandise exports amounted to $22.5 billion, unchanged from 2001, and were equal to 61.2% of GDP at market prices. Foreign countries accounted for 49.4% of merchandise exports and other Canadian provinces and territories accounted for the balance. In 2002, of the total foreign merchandise exports, 81.6% were to the United States, 9.6% to Asia and 3.8% to Europe.

      Over the five years 1998 to 2002, exports to the United States increased by 25.1% (representing a compound annual growth rate of 5.8%) and exports to all other countries decreased by 14.9% (representing a compound annual growth rate of -3.9%). Changes in currency exchange rates have had a positive impact on exports over the 1998 to 2002 period and are likely to continue affecting export levels in the future.

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      The following table sets forth foreign exports by commodity and the compound annual growth rates for the years 1998 through 2002.

FOREIGN EXPORTS BY COMMODITY (1)

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1998		1999		2000		2001		2002		1998-2002
		(In millions of dollars)
Manufacturing
	Food		$1,040.5		$834.2		$830.0		$995.9		$1,051.2		0.3	%
	Transportation Equipment		1,048.1		1,229.6		1,053.0		1,139.7		944. 5		-2.6
	Primary Metals		716.0		608.1		745.8		803.5		847.1		4.3
	Machinery		718.4		503.9		584.8		535.9		679.8		-1.4
	Wood		351.8		505.6		540.8		531.4		573.3		13.0
	Chemicals		232.0		333.6		359.2		418.1		398.1		14.5
	Paper and Allied		236.2		240.9		268.6		254.9		267.1		3.1
	Plastics		137.4		170.0		178.5		210.5		221.4		12.7
	Printing and Publishing		92.9		101.4		124.8		165.6		195.2		20.4
	Electrical and Electronic		303.7		235.7		274.7		273.8		188.2		-11.3
	Furniture and Fixtures		131.1		128.0		158.2		171.5		166.8		6.2
	Clothing and Textiles		136.4		157.7		193.2		156.5		145.2		1.6
	Fabricated Metals		76.6		72.0		95.1		126.1		119.2		11.7
	Other		183.7		227.0		340.2		245.7		299.9		13.0
Total Manufacturing			5,404.9		5,347.6		5,746.8		6,029.1		6,097.0		3.1
Agriculture
	Wheat		456.1		458.9		511.0		690.4		475.0		1.0
	Oilseeds		673.7		499.0		391.4		451.0		408.1		-11.8
	Cattle		238.4		176.8		188.3		257.7		273.2		3.5
	Hogs		155.8		165.3		207.6		247.5		246.0		12.1
	Vegetables		100.2		124.5		125.7		166.4		152.5		11.1
	Other Grains		119.6		115.9		135.7		179.7		140.5		4.1
	Other Agriculture		31.4		34.5		34.5		37.3		38.6		5.2
Total Agriculture			1,775.2		1,575.0		1,594.1		2,030.0		1,733.9		-0.6
Electricity			356.2		343.0		442.7		534.7		390.5		2.3
Other Primary			43.2		45.4		43.8		50.4		35.8		-4.6
Oil Trans Shipment			311.2		505.1		596.0		664.1		756.5		24.9
Other			178.0		222.9		255.4		267.8		279.5		11.9
Total			$8,068.5		$8,039.1		$8,678.8		$9,576.1		$9,293.2		3.6

     (1) Most export data, except for some principal grains, are based on port-of-exit information; consequently, data for many categories do not reflect the true value of provincial foreign exports. The above data for 2002 include two items that do not truly reflect foreign exports of Manitoba products. Oil Trans Shipment represents crude oil production that originated in Alberta and Saskatchewan and was shipped through the Province. The value of nickel exports is $328.4 million. This does not include an estimated $29.4 million of nickel, which was exported through Ontario in that year.

Source: Statistics Canada.

     Total foreign exports for the first eight months of 2003 were down 5.8% compared to the first eight months of 2002. On a year-to-date basis, exports to the United States have decreased by 7.8% while exports to other countries have increased by 3.4%.

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Capital Investment

      In 2002, capital investment increased 1.6%. The largest increases in capital investment occurred in housing and public administration. The largest decreases in capital investment occurred in mining and retail trade. The Statistics Canada survey of investment intentions published in July 2003 indicates that capital investment in 2003 is expected to increase by 1.7%. Private capital investment is expected to decrease 0.6% and public investment to increase 8.7%. The largest increases are expected to occur in wholesale trade, education, real estate, and mining. The largest decreases are expected to occur in other capital investment and housing.

      The following table sets forth categories of capital investment and the compound annual growth rates for the years 1998 through 2002.

CAPITAL INVESTMENT

											Compound
											Annual
	Year Ended December 31,										Growth
											Rate
	1998		1999		2000		2001		2002		1998-2002
	(In millions of dollars)
Housing		$865.5		$853.8		$911.5		$1,012.8		$1,195.4		8.4	%
Public Administration		420.2		567.2		507.2		565.9		606.2		9.6
Manufacturing		584.2		551.4		633.1		557.0		533.8		-2.2
Utilities		379.0		418.0		396.1		515.0		526.4		8.6
Transportation and Storage		639.6		659.2		375.1		421.5		437.8		-9.0
Finance and Insurance		265.8		312.4		360.3		359.9		360.6		7.9
Agriculture		354.9		260.8		282.9		302.8		309.5		-3.4
Real Estate		145.4		229.2		232.1		211.3		213.5		10.1
Mining		154.2		128.9		236.3		249.6		209.1		7.9
Retail Trade		149.4		152.8		232.1		199.1		170.0		3.3
Health Care and Social Services		87.1		183.1		203.1		157.3		169.3		18.1
Construction		141.4		110.2		101.9		136.4		143.4		0.4
Wholesale Trade		167.8		190.2		137.7		140.1		141.9		-4.1
Education		94.5		112.2		117.6		151.1		95.7		0.3
Professional and Scientific		107.3		63.7		111.6		90.8		73.5		-9.0
Other		444.1		392.7		359.3		520.5		493.9		2.7
Total		$5,000.4		$5,185.8		$5,197.9		$5,591.1		$5,680.0		3.2
Private		$3,931.1		$3,807.1		$3,908.5		$4,232.7		$4,266.6		2.1
Public		1,069.3		1,378.8		1,289.4		1,358.4		1,413.3		7.2
Total		$5,000.4		$5,185.8		$5,197.9		$5,591.1		$5,680.0		3.2

Source: Statistics Canada.

Labor Force

      In 2002, employment increased by 1.6% with growth occurring in information, culture and recreation; agriculture; education and health services; accommodation and other services; professional and administrative services; utilities; and wholesale and retail trade. Declines were recorded in construction; forestry, fishing and mining; transportation and storage; manufacturing; finance, insurance and real estate; and public administration. In 2002, the average unemployment rate in Manitoba was 5.2%, the lowest of any province in Canada and significantly lower than Canada’s rate of 7.7%.

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      The following table sets forth selected labor force statistics for Manitoba and Canada for the years 1998 through 2002.

LABOR FORCE

	Annual Averages
	1998		1999		2000		2001		2002
	(In thousands unless otherwise indicated)
Labor Force		566.8		574.8		583.2		587.1		598.0
Employment		535.7		542.7		554.4		557.9		567.0
Participation Rate		67.0		67.5		67.9		68.1		69.2
Participation Rate (Canada)		65.1		65.6		65.9		66.0		66.9
Unemployment Rate		5.5		5.6		4.9		5.0		5.2
Unemployment Rate (Canada)		8.3		7.6		6.8		7.2		7.7

Source: Statistics Canada.

     In the first nine months of 2003, seasonally adjusted employment in Manitoba increased 0.5% compared to the same period for 2002, reaching 568,900. Employment increases were recorded in accommodation and other services; utilities; construction; professional and administrative services; and education and health services. Declines were recorded in forestry, fishing and mining; information, culture and recreation; wholesale and retail trade; public administration; finance, insurance and real estate and transportation and storage; agriculture; and manufacturing.

      In the first nine months of 2003, the seasonally adjusted unemployment rate in Manitoba averaged 4.9%, down from 5.2% in the same period in 2002. In the first nine months of 2003, the seasonally adjusted unemployment rate in Canada averaged 7.7%. Manitoba’s seasonally adjusted labor force participation rate over the first nine months of 2003 averaged 69.0%, unchanged from the same period of 2002.

Energy

      Refined petroleum and natural gas provided 38.3% and 32.7%, respectively, of the Province’s total energy needs in 2001, while 26.5% was provided by hydro-electric energy generated in the Province. For more information on hydro-electric energy generated in the Province, see “The Manitoba Hydro-Electric Board.”

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GOVERNMENT FINANCES

      Under the Constitution, the Province has the power to impose direct taxation within the Province in order to raise revenue for Provincial purposes. It also has exclusive jurisdiction over the borrowing of money on the sole credit of the Province.

      Under the statutes of the Province, public money is deposited to the credit of the Minister of Finance and forms part of the Consolidated Fund of the Province. Money necessary to carry out the operations of the Province in each fiscal year is voted by the Legislative Assembly, with the exception of those expenses for which provision has already been made by special legislation, such as amounts required to service the debt of the Province and to fulfill guarantees made by the Province. In addition, the Lieutenant Governor in Council may, when the Legislative Assembly is not in session, authorize expenses that are urgently and immediately required for the public good through the issuance of special warrants.

      The financial statements for the Consolidated Fund of the Province of Manitoba (which are included in an exhibit to the Province’s Annual Report on Form 18-K, which exhibit is incorporated by reference) reflect, in a single set of financial statements, the transactions and balances of the Operating Fund (which records the operations of government departments and programs), the Trust Fund (which records the trust administration function) and other special funds of the Province, on a combined basis. The accounts and financial statements of the Province are examined by the Auditor General who is responsible to the Legislative Assembly and is required to make a report to the Legislative Assembly with respect to each fiscal year.

      The revenues and expenses of the Provincial Government are recorded in the financial statements for the Consolidated Fund on an accrual basis with the following exceptions:

a)  Government of Canada Receipts — Generally, entitlements from the Government of Canada for transfer payments, the transfer having been authorized and any eligibility criteria met, as well as for the Province’s share of individual and corporation income tax pursuant to the Federal-Provincial Tax Collection Agreements, are recorded on a cash basis for cash receipts received up to March 31 plus an accrual of prior period adjustments determined before June 30 each year.

b)  Other Revenue — All other revenues are recorded on an accrual basis except when the accruals cannot be determined with a reasonable degree of certainty or when their estimation is impracticable. Recoveries of the debt servicing costs on self-supporting debt and revenue earned on investments and advances are recorded as a reduction of debt servicing expense.

c)  Expenses — All expenses incurred for goods and services received are recorded on an accrual basis. Exceptions to this policy involve the acquisition of inventories acquired for the government’s use that are reflected as expenses when incurred as well as items d) and e) noted below.

Expenses include provisional amounts recorded in anticipation of future costs which are quantifiable and have been identified as obligations. Government transfers are recognized as expenses in the period during which the transaction is authorized and any eligibility criteria are met.

d)  Pension Benefits — The annual cost recorded is based on the government’s share of pensions paid to retired employees, teachers and Members of the Legislative Assembly, as well as current contributions to Registered Retirement Savings Plan accounts and tax paid trusts on behalf of MLAs and employees who are pensionable outside of the Civil Service Superannuation Fund. The government does not record its liability for the unfunded cost of pension benefits earned by employees, teachers and Members of the Legislative Assembly.

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e)  Employee Future Benefits — The government does not record liabilities for the unfunded cost of employee future benefits earned by employees of heath care facilities and family services agencies.

      These accounting policies have been developed and are applied in accordance with the provisions of the provincial Financial Administration Act.

      Fluctuations in the value of direct funded debt payable in foreign currencies, debt discounts and premiums and investment discounts and premiums are amortized monthly over the life of the debt or investment.

      The accounts of the Consolidated Fund of the Province include investments in, and loans, advances and grants to, Crown organizations and government enterprises, but in general do not include the profits or losses of these entities. Each of these entities maintains its own accounting records, which are audited annually. For information relating to loans and advances to Crown organizations and government enterprises, see “Crown Organizations and Government Enterprises.”

      The accounts of the Consolidated Fund do not include revenue and expenditure of local government bodies such as municipalities and school boards which carry out certain responsibilities delegated by the Province, except that provincial assistance provided to those entities is included in the accounts of the Consolidated Fund as an expense.

      In addition to the financial statements for the Consolidated Fund, the Government of Manitoba also annually prepares Summary Financial Statements (see “Summary Financial Statements”) (which are included in an exhibit to the Province’s Annual Report on Form 18-K, which exhibit is incorporated by reference) which consolidate the financial statements of the Consolidated Fund with the financial statements of the various Crown organizations and government enterprises (i.e. entities whose principal activity is carrying on a business). See “Tables of Supplementary Information — Tables III and IV.” The Summary Financial Statements reflect a liability for the unfunded cost of pension benefits earned by employees, teachers and Members of the Legislative Assembly.

      The Provincial Government prepares a budget for each fiscal year, which estimates revenue and expenses. The Fiscal Stabilization Fund was established to cushion fluctuations in provincial revenue and provide a more stable basis for fiscal decisions. The Fund is also available for special initiatives. The Fiscal Stabilization Fund earns interest. Transfers to and from the Fiscal Stabilization Fund are determined by the Minister of Finance, subject to approval by the Lieutenant Governor in Council. At March 31, 2003, the Fiscal Stabilization Fund had $235 million in liquid assets.

      The Balanced Budget, Debt Repayment and Taxpayer Accountability Act (the “Balanced Budget Act”) requires the total expenses of the Province (both current and capital) (plus transfers from the Fiscal Stabilization Fund) to be no greater than revenue (plus transfers to the Debt Retirement Fund). Transfers to and from the Fiscal Stabilization Fund, the Debt Retirement Fund and the Pension Assets Fund may not be recorded as an expense or revenue but are recorded as transfers. Debt repayments in the Debt Retirement Fund also include the payments of the pension liability of the government. The exceptions in the determination of a positive or negative balance for the Balanced Budget Act include war, disaster or a single year decline in revenue of 5.0% or more which is not the result of a change in Manitoba taxation laws. Proceeds from the sale of a Crown corporation may not be used in determining whether there is a positive or negative balance for a fiscal year.

      If a deficit not allowed under the Balanced Budget Act is incurred, the salaries of all members of the Executive Council will be reduced, and the shortfall is required to be made up in the subsequent year. These provisions do not apply in the fiscal year during which an election results in a change in the party forming the Government. The Balanced Budget Act requires minimum, annual payments to the Debt Retirement Fund, which currently are at a level of $96 million per year, for the purpose of retiring the net general-purpose debt and pension liability of the Province.

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The Balanced Budget Act limits tax increases by requiring the approval of voters in a referendum before the rates of four major taxes may be increased. At present, these four taxes account for about three-quarters of own source revenue and about one-half of total revenue. Exceptions are allowed for revenue-neutral rebalancing of Provincial tax rates, and for offsetting changes in federal and provincial taxes.

      Total Operating Fund expenses and transfers to the Debt Retirement Fund for the year ended March 31, 2003 were $7,039.7 million, up $15.7 million from the budget estimate of $7,024.0 million, reflecting higher than anticipated health care, offset by lower Public Debt costs. Total Operating Fund Revenue plus a transfer of $23 million from the Fiscal Stabilization Fund, was $7,044.3 million or $10.0 million higher than the budget estimate of $7,034.3, reflecting a greater distribution from Manitoba Hydro, lower Federal transfers and a smaller transfer from the Fiscal Stabilization Fund. The reported budgetary surplus for the year ended March 31, 2003 was $4.6 million as compared to an estimated surplus of $10.4 million.

      The budget for the fiscal year ending March 31, 2004 was presented to the Legislature on April 22, 2003.

      On September 30, 2003, Royal Assent was given to the Supplementary Estimates of Expenditure. Supplementary Estimates provided additional expenditure authority of $68.0 million for emergency expenditures required for fire suppression costs as well as costs related to compensation programs for producers adversely impacted by BSE-related restrictions on livestock exports. Additional statutory expenditures of $10.9 million primarily related to electoral costs were also included in the Supplementary Estimates.

      Beginning in September 2003, the results of the 2001 federal population census are being used to calculate Equalization and CHST transfers for all entitlements with respect to fiscal years ended March 31, 2001 and ending March 31, 2004. The census results increased Manitoba’s population and population share of the Canadian total and combined with changes in data used to calculate entitlements, the effect is to increase Manitoba’s projected federal transfer revenue in fiscal year ending March 31, 2004 by $150 million over the amount projected in the Budget.

      The budget estimates included a $52 million distribution of retained earnings from Manitoba Hydro to the Province. As Manitoba Hydro now expects to record a loss in fiscal year ending March 31, 2004, the Province no longer anticipates receiving this amount.

      The Province will adjust the transfer from the Fiscal Stabilization Fund from the original $48 million, as necessary to meet the requirements of the Balanced Budget Act.

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      The following table sets forth the transactions of the Operating Fund for the four fiscal years ended March 31, 2003 and the budget estimate for the fiscal year ending March 31, 2004.

STATEMENT OF OPERATING FUND TRANSACTIONS

		Year Ending March 31,												Budget
														Estimate
		2000			2001			2002			2003			2004 (6)
		(In millions of dollars)
Revenue (1)
	Federal Transfers		$2,073.1			$2,091.4			$2,206.4			$2,229.7			$2,508.0
	Individual and Corporate Income Taxes		1,918.1			2,200.8			1,965.7			1,796.9			1,973.2
	Other Corporation Taxes		399.5			404.7			420.0			445.1			456.7
	Sales Taxes		974.6			1,000.8			1,031.5			1,077.7			1,126.8
	Luxury Taxes		493.9			518.5			549.9			612.3			623.2
	Gasoline and Motive Fuel Taxes		218.4			223.5			222.9			231.2			231.3
	Natural Resources Revenue		93.6			138.6			155.7			153.9			145.1
	Manitoba Hydro Retained Earnings Distribution		—			—			—			203.4			52.0
	Other Revenue		166.6			173.7			194.7			220.0			197.6
	Total Revenue before Transfer from Fiscal Stabilization Fund and Extraordinary Item		6,337.8			6,752.0			6,746.8			6970.2			7,313.9
	Extraordinary Item — Adjustment to estimate for Federal accounting error		—			—			—			51.1			—
	Total Revenue before Transfer from Fiscal Stabilization Fund		6,337.8			6,752.0			6,746.8			7,021.3			7,313.9
Expenses (1)
	Health and Community Services		3,067.7			3,302.3			3,504.0			3,693.9			3,897.4
	Education		1,187.4			1,265.9			1,288.3			1,347.1			1,411.8
	Economic and Resource Development		793.6			718.2			640.9			686.7			807.0
	Consumer Services, Public Protection and Other Government Services		634.8			463.3			520.7			527.9			516.7
	Manitoba Tax Credit Programs		177.7			218.1			233.3			216.5			230.7
	Direct Local Government Assistance		110.0			135.8			134.6			143.4			145.8
	Allowance for Losses		0.2			0.9			1.6			6.8			0.8
	Public Debt		465.3			510.7			414.1			321.4			331.0
	Less: Year-end Savings (2)		—			—			—			—			(85.0	)
Total Expenses Before Transfer to Debt Retirement Fund			6,436.7			6,615.2			6,737.5			6,943.7			7,256.2
Operating Fund Surplus/(Deficit) Before Transfers			(98.9	)		136.8			9.3			77.6			57.7
Transfer from Fiscal Stabilization Fund (3)			184.7			—			150.0			23.0			48.0
Transfer to Debt Retirement Fund			(75.0	)		(96.0	)		(96.0	)		(96.0	)		(96.0	)
Operating Fund Surplus (4)(5)			$10.8			$40.8			$63.3			$4.6			$9.7

Financing Requirements
Refinancing
	For General Government Programs		$1,169.0
	For The Manitoba Hydro-Electric Board		220.4
	For Other Self-Sustaining Programs		66.4
New Cash Requirements
	For General Government Capital Investments		25.0
	For The Manitoba Hydro-Electric Board		774.0
	For Other Self-Sustaining Programs		77.8
		Total Provincial Financing Requirement	$2,332.6

     (1) For additional details, see “Tables of Supplementary Information — Tables I and II”.

     (2) Anticipated unexpensed portion of budgeted amount.

     (3) The budget papers presented in April 2002, had forecasted a distribution of retained earnings from Manitoba Hydro of $150 million for the year ended March 31, 2002. Because the legislative authority for this transfer did not take effect until August 2002, the distribution was reflected in the 2002/03 fiscal year results.

     (4) Volume 1 of the Public Accounts for the year ended March 31, 2003 (being filed as an exhibit to the Province’s Annual Report on Form 18K, which exhibit is incorporated by reference) reflects both the Summary Financial Statements of the Government and the transactions and balances of the Operating Fund and Special Funds of the Province of Manitoba. The Summary Financial Statements of the Government of the Province of Manitoba are designed to reflect the Government’s management of public financial affairs and resources as a whole.

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     (5) The Operating and Special Funds financial statements do not include the Government’s pension liabilities. If the pension liabilities were included, the liabilities and accumulated deficit of the Operating and Special Funds as at March 31, 2003 would increase by $3.4 billion.

     (6) Budget Estimate 2004 does not include $78.9 million of Supplementary Estimates of Expenditure, for more information, see “Government Finances”.

Revenue

      Provincial Source Revenues. Of its Total Revenue Before Transfer from Fiscal Stabilization Fund budgeted for the fiscal year ending March 31, 2004, the Province expects to derive $4,805.9 million or about 65.7% from provincial sources.

      Taxation in Canada is constitutionally divided between the Federal and Provincial Governments. The Federal Government collects taxes partly for its own expenditures and partly for distribution to the provinces. The Federal Government has authority to apply both direct and indirect taxes while provinces generally may apply direct taxes only. However, provinces may apply limited indirect taxation in the resource field. Local governments derive their taxing powers from the provinces.

      The personal income tax field is shared by the Federal and Provincial Governments. The Province has a personal income tax with 3 brackets and rates ranging up to 17.4% applied directly to taxable income, subject to certain tax credits which are generally recorded as expenses. The personal income tax is collected on the Province’s behalf by the Federal government.

      Personal income tax revenue in the fiscal year ending March 31, 2004 is budgeted at $1,703.0 million, net of the municipal share of individual income taxes which is collected by the Government of Canada and remitted by the Province to municipalities in accordance with the Provincial — Municipal Tax Sharing Act.

      The Province is lowering its levies on corporation income taxes of small business. The tax rate on taxable income of small businesses (currently with active business income of less than $320,000) is 5%. The small business threshold will be increased to $360,000 on January 1, 2004 and $400,000 on January 1, 2005. The rate for large businesses was reduced from 16.5% of taxable income to 16.0% on January 1, 2003 and will be reduced by further reductions of 0.5% each January 1 thereafter until it reaches 15% on January 1, 2005. Corporation income tax revenue for the fiscal year ending March 31, 2004 is budgeted at $270.2 million, net of provincial-municipal revenue sharing arrangements under which the Province allocates 1.0 percentage point of its corporation taxable income to local governments.

      The Province applies a tax at a general rate of 7% on retail sales of most tangible personal property, with major exemptions in respect of food for home consumption, children’s clothing under $150, custom software and most farm machinery and prescription drugs. Retail sales tax revenue in the fiscal year ending March 31, 2004 is budgeted at $1,057.8 million.

      The Province levies a tax of 11.5¢ per litre on gasoline, and 10.9¢ per litre on motive fuels. For the fiscal year ending March 31, 2004, the revenues from gasoline and motive fuel taxes are budgeted at $231.3 million. There is also a tobacco tax of 15.5¢ per cigarette and 14.5¢ per gram of loose tobacco. Total tobacco tax revenue for the fiscal year ending March 31, 2004 is budgeted at $190.4 million.

      A levy for financing health and post-secondary education is applied to total compensation paid to employees by Manitoba employers. Employers with annual payrolls under $1 million are exempt and those with payrolls between $1 million and $2 million are subject to reduced rates. The tax rate on taxable payroll is 2.15%. For the fiscal year ending March 31, 2004, the levy is budgeted to yield $263.4 million.

      Federal Government Transfers. Transfer payments from the Federal Government are budgeted to provide $2,508.0 million, or approximately 34.3% of the Province’s Total Revenue Before Transfer from Fiscal Stabilization Fund budgeted in the fiscal year ending March 31, 2004. Unconditional transfers, primarily receipts under a Federally funded provincial revenue

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equalization formula and cash payments under the Canada Health and Social Transfer, account for approximately 32.6% of total budgetary revenue. Conditional transfers, consisting mainly of federal cost-sharing payments in respect of programs for social and economic development, account for the remainder of Federal government transfers.

      The largest and most important of these Federal-provincial financing arrangements are authorized by the Federal-Provincial Fiscal Arrangements Act, (the “Federal Act”). The Federal Act establishes the concept of tax revenue equalization on a per capita basis to a value established by a formula incorporating a representative average tax system of the provinces. The Province budgeted unconditional revenue of $1,387.9 million from Federal equalization payments in the fiscal year ending March 31, 2004. The formula is subject to review at five year intervals, with the next review scheduled for next year.

      The current Canada Health and Social Transfer Arrangements within the Federal Act provide for federal assistance in respect of social programs through transfers to the Provincial governments of income taxing authority and cash payments. The amount of Federal assistance does not bear a direct relationship to the program costs of the Province, but rather is calculated on the basis of per capita entitlements. On October 20, 2000, the Federal Government passed an Act to increase payments under the Canada Health and Social Transfer. The total cash basic component of these arrangements is budgeted at $763.5 million for Manitoba for the fiscal year ending March 31, 2004. In addition $17.9 million from the National Medical Equipment Fund and $8.5 million from the Primary Health Care Transition fund will be received in fiscal year 2003/04.

      In February 2003, the Federal Government announced a Health Financing Arrangement that added additional funds in support of Health and Social programs. These funds are in the form of the Canada Health and Social Supplement and amount to $2.5 billion nationally. An additional $2.0 billion is contingent on the Federal Government achieving its fiscal target. Manitoba’s share of the $4.5 billion total would be $163.6 million and has been budgeted for the fiscal year ending March 31, 2004.

      In January 2002, the Federal government discovered a long-standing error with respect to personal income tax remittances to provinces for taxes collected by the Federal government on behalf of the provinces. Several provinces, including Manitoba, received overpayments. Transfer payments of most provinces were also impacted by this error. The Federal government has recovered from Manitoba a total of $168 million related to the 2000 tax year remittances and has recovered a further $61 million for the 2001 tax year. In September 2002, the Federal government announced a settlement with the provinces affected by this error and an amendment to equalization regulations which resulted in Manitoba receiving an additional $138 million for 2001/02. In accordance with the settlement, Manitoba will reimburse the Federal government $91 million, to be paid in ten equal annual installments beginning in 2004/05. Also, as part of the settlement, Manitoba received a $140 million transitional payment in 2002/03. This payment offset a similar amount which had been budgeted as equalization revenue in the Budget Estimate 2003 and which was not received.

      In February 2003, the Federal Government announced that it would use forecast data in the detailed calculation of Equalization entitlements for the mining tax base in 2002/03, which reduced revenue to the Province for that fiscal year. When Equalization entitlements are re-calculated using more current data, Manitoba estimates that it will receive an additional $84 million in equalization transfers and this amount has been included in the Equalization revenue budgeted for the fiscal year ending March 31, 2004.

      The Federal Act includes a stabilization formula, which provides for federal grants and interest-free loans if revenue from a province’s own sources plus equalization falls below 95% of the previous year’s level, excluding variations of natural resource revenue. The Federal Act also provides a limited guarantee arrangement to compensate provinces for certain losses incurred during the calendar year in which a national personal income tax change results in provincial income tax reductions.

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Expenditure

      Health and Community Services. For the fiscal year ending March 31, 2004, expenditure on Health and Community Services is budgeted at $3,897.4 million, an increase of 5.5% over the prior year. This is the largest single expenditure category and represents 53.0% of the Province’s total budgeted expenditure and transfer to Debt Retirement Fund. Health and Community Services includes the Universal Health Benefits Plan under which hospital and medical care is available to Manitoba residents without charge. Under this Plan, the Province pays all the operating costs as well as the debt servicing costs of approved capital construction for hospitals and personal care institutions. The Province has budgeted the gross cost of services under the Plan at $3,004.2 million for the fiscal year ending March 31, 2004, an increase of 6.2% over the prior year.

      Also included in this category is $869.4 million budgeted for the Province’s social security program which provides income security, financial assistance to the elderly, rehabilitation services for physically and mentally handicapped persons and child welfare services.

      Education. Education expenditure for the fiscal year ending March 31, 2004 is budgeted at $1,411.8 million, an increase of 4.8% over the prior year, and represents 19.2% of Manitoba’s total budgeted expenditure and transfer to Debt Retirement Fund. The major portion of this expenditure, amounting to $841 million, is for providing direct financial support to local school divisions for the approved cost of public schools in the Province as well as the debt servicing costs of approved capital construction for schools. The additional funds required to operate the public schools, plus any special projects undertaken by the school divisions, are derived from a property tax on the residents of the divisions.

      This expenditure also includes financial support for the four universities and the three community colleges in the Province, which is budgeted to amount to $524.8 million for the fiscal year ending March 31, 2004.

      Economic and Resource Development. Expenditure on economic and resource development is budgeted at $807.0 million for the fiscal year ending March 31, 2004, an increase of 17.5% from the prior year, and represents 11% of Manitoba’s total budgeted expenditure and transfer to Debt Retirement Fund. The largest item in this category is Transportation and Government Services, amounting to $341.1 million.

      Consumer Services, Public Protection and Other Government Services. Expenditure for Consumer Services, Public Protection and Other Government Services is budgeted at $516.7 million, a decrease of 2.1% over the prior year.

      Other. The Province also provides property and cost-of-living tax credits to residents of Manitoba, budgeted at $230.7 million for the fiscal year ending March 31, 2004.

      Expenditure for Provincial assistance to local governments is budgeted at $145.8 million for the fiscal year ending March 31, 2004 and includes $72.9 million for grants to the City of Winnipeg and $14.6 million for grants in lieu of taxes to municipalities.

      The net cost of servicing total direct public debt after deducting recoveries from Crown Organizations and investment earnings is budgeted at $331.0 million, an increase of 3.0% over the prior year. For the fiscal year ending March 31, 2004, the gross interest expense for the Province’s direct funded debt is estimated to be $1,289 million, which is reduced by $232 million of interest income and $726 million of debt on which interest is recovered from Crown Organizations and other government entities.

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SUMMARY FINANCIAL STATEMENTS

      The Summary Financial Statements of the Government of the Province of Manitoba (See “Tables of Supplementary Information — Tables III and IV”) reflect the financial results of the Government Reporting Entity which consists of the Consolidated Fund plus Crown organizations and government enterprises (i.e. entities whose principal activity is carrying on a business). These financial statements consolidate the financial statements of all of the organizations comprising the Government Reporting Entity, except for government enterprises, which are accounted for by the modified equity method of accounting. The purpose of the Summary Financial Statements is to report fully the nature and extent of the financial affairs and resources for which the Government is ultimately responsible.

      In order to be considered a part of the Government’s Reporting Entity for the “Summary Financial Statements”, an organization must be accountable for the administration of its financial affairs and resources to a minister of the Government, or directly to the Legislature, and must be owned and/or controlled by the Government, as determined by legislative provisions or by a majority holding of voting share capital. The financial operations of organizations which are not part of the Government Reporting Entity are reflected in the Summary Financial Statements only to the extent that:

1.    they receive money from or pay money to the Government, or

2.    any non-recoverable deficits they incur are adjusted against the amounts loaned, advanced or invested in them by the Government, or

3.    where the Government has no loans, advances or investments involved, any losses they incur, which are assumed by the Government, are recorded as accrued charges.

      Crown organizations are consolidated after adjusting them to a basis consistent with the accounting policies of the Government Reporting Entity. Inter-entity accounts and transactions are eliminated upon consolidation, except for retail sales tax and the levy for health and education, which remain on a gross basis as operating expenses and revenue. Where the fiscal year-end of Crown organizations is not the same as that of the Government Reporting Entity and their transactions significantly affect the financial statements, they are restated to March 31.

      Government enterprises maintain their accounts in accordance with accounting principles which are generally accepted for business enterprises and which are considered appropriate to their individual objectives and circumstances. They are reported by the modified equity method of accounting without adjusting them to a basis consistent with that of the Government Reporting Entity. Under the modified equity method, the Province includes the Government enterprises’ net assets and net income by adjusting the investment shown in the Province’s Statement of Financial Position and by presenting the net income as a separate item on the Province’s Statement of Revenues and Expenses. The financial results of enterprises are not restated to March 31 notwithstanding that their fiscal year-end may not be the same as that of the Government Reporting Entity. Inter-entity accounts and transactions are not eliminated, nor are normal inter-entity operating transactions disclosed separately.

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CROWN ORGANIZATIONS AND GOVERNMENT ENTERPRISES

      The Province provides certain services and promotes certain types of social and economic development through Crown organizations and government enterprises (“Crown organizations”) which have access to financial assistance from the Province through advances, equity investments, guaranteed borrowings, loans and grants. Crown organizations such as The Manitoba Hydro-Electric Board are intended to operate on a commercial basis, rather than being subsidized by the Province. The Province also operates other Crown organizations, such as The Manitoba Agricultural Credit Corporation and The Manitoba Housing and Renewal Corporation, on a partially subsidized basis with funds provided from departmental appropriations. With the exception of The Liquor Control Commission and The Manitoba Lotteries Corporation, the profits of which are transferred to the Province, Crown organizations generally retain their profits for their own requirements. However, Manitoba Hydro was authorized to distribute retained earnings to the Province for the fiscal years ending 2003 and 2004. Loans, advances, investments and grants are made as required for the operations of the organizations pursuant to appropriations in the Provincial Budget or through specific enactment by the Legislative Assembly.

      A valuation allowance is provided in the accounts of the Province for decreases in the value of loans and advances made to Crown organizations, and is adjusted annually for changes that occur in the estimated realizable value of these assets, based on financial results applicable to the most recent fiscal year completed prior to April 1. The allowance is intended to provide for any accumulated operating and capital deficits of Crown organizations. This allowance as at March 31, 2003, was $93.3 million in respect of the Province’s total loans and advances to its Crown organizations in the amount of $7,390.1 million at such date.

      The following table summarizes the loans and advances of the Province’s principal Crown organizations for the years 1999 through 2003 and the allowance for losses on realization of assets as at March 31, 2003:

LOANS AND ADVANCES TO

CROWN ORGANIZATIONS AND GOVERNMENT ENTERPRISES (1)

	As at March 31,
											2003
											Valuation
	1999		2000		2001		2002		2003		Allowance
	(In thousands of dollars)
The Manitoba Hydro-Electric Board (2)		$6,202,135		$6,854,360		$7,017,104		$7,221,434		$6,374,894		$—
The Manitoba Housing and Renewal Corporation		386,873		370,077		355,007		351,968		345,052		17,787
The Manitoba Agricultural Credit Corporation		258,993		310,811		314,545		326,423		311,627		29,504
The Manitoba Lotteries Corporation (3)		—		—		170,000		170,000		173,700		—
Manitoba Development Corporation		80,633		87,477		88,168		104,378		107,184		40,796
Other		192,469		92,236		84,809		90,022		77,666		5,237
Total		$7,121,103		$7,714,961		$8,029,633		$8,264,225		$7,390,123		$93,324

     (1) Crown Organizations and Government Enterprises also have debt not guaranteed by the Province which consists of $184.6 million held by Canada Mortgage and Housing Corporation, an agency of the Federal government, $36 million held by various First Nation Bands and $2.6 million of assumed mortgages on existing property.

     (2) Provincial advances have been adjusted by the foreign currency fluctuation on the Direct Debt of the Province for which Manitoba Hydro is responsible.

     (3) Refinancing of debt which was previously directly incurred by this entity.

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     The Manitoba Hydro-Electric Board provides for a supply of electrical power adequate for the needs of Manitoba, and promotes economy and efficiency in the generation, distribution, supply and use of electrical power within Manitoba. See “The Manitoba Hydro-Electric Board.” Pursuant to legislation enacted in 2001, the Government may not privatize Manitoba Hydro unless approved by the voters of Manitoba in a referendum.

      The Manitoba Housing and Renewal Corporation undertakes the construction of housing projects and administers various Provincially subsidized housing programs, including rental subsidies for low income families, housing grants for elderly persons and housing improvement programs.

      At March 31, 2003, the Corporation had total assets of $614.7 million represented by $310.6 million of projects completed or under construction, owned land held for development and/or sale having a book value of $13.7 million, loans and mortgages receivable of $169.9 million and other assets of $120.6 million.

      The Manitoba Agricultural Credit Corporation provides credit for farmers principally through direct loans for capital purposes secured by first mortgages held by the Corporation and through guarantees of loans by chartered banks.

      At March 31, 2003, the Corporation had total assets of $300.8 million, of which $269.8 million represented receivables secured by first mortgages on farmland and buildings. For the fiscal year ended March 31, 2003, the Corporation’s operating deficit was $0.7 million, after a Provincial operating grant of $5.2 million. As at March 31, 2003, the accumulated deficit of the Corporation was $26.8 million, primarily representing an allowance for doubtful accounts which the Province will fund as accounts are written off.

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PUBLIC DEBT

Debt Record

      The Province has always paid the full face amount of the principal of and premium and interest on (a) every direct obligation issued by it and (b) every indirect obligation on which it has been required to implement its guarantee, all promptly when due in the currency in which and country where payable at the time of payment thereof, subject during wartime to any applicable laws and regulations forbidding trading with the enemy.

Direct Funded Debt of the Province

      The Province borrows to fund its net cash requirement. The following table summarizes the direct funded debt of the Province by currency as at March 31 for the years 1999 through 2003.

DIRECT FUNDED DEBT OF THE PROVINCE (1)

		As at March 31,
		1999		2000		2001		2002		2003 (2)
		(In thousands of dollars)
Direct Funded Debt Payable in:
	Canadian Dollars (3)		$10,175,179		$11,115,797		$11,548,212		$11,807,490		$11,812,749
	Issues hedged to Canadian Dollars		2,045,427		2,852,563		2,624,374		3,221,628		3,348,799
	U.S. Dollars		5,517,267		5,087,250		4,765,523		3,734,567		3,305,925
	Issues hedged to U.S. Dollars		880,384		574,016		1,015,640		1,555,051		939,179
Total Direct Funded Debt			18,618,257		19,629,626		19,953,749		20,318,736		19,406,652
	Less: Sinking Funds		5,821,697		6,411,147		6,188,797		6,485,514		5,805,288
	Net Direct Funded Debt		$12,796,560		$13,218,479		$13,764,952		$13,833,222		$13,601,364
Raised for the purpose of:
	General Government Programs (4)		$6,773,800		$6,718,334		$6,788,756		$6,643,283		$6,641,425
	The Manitoba Hydro-Electric Board		5,083,853		5,566,339		5,670,440		5,701,237		5,398,925
	Other		938,907		933,806		1,305,756		1,488,702		1,561,014
	Net Direct Funded Debt		$12,796,560		$13,218,479		$13,764,952		$13,833,222		$13,601,364

     (1) Debentures payable in U.S. dollars and other foreign currencies are stated at the Canadian dollar equivalent using the exchange rates in effect on March 31 each year adjusted for any foreign currency contracts entered into for settlement after those dates.

     (2) Subsequent to March 31, 2003, the Province issued funded debt of $1,748 million in Canadian dollars and AUD $100 million hedged to Canadian dollars, which was issued to finance maturing issues and for self-sustaining programs including Manitoba Hydro.

     (3) Direct funded debt payable in Canadian dollars includes debentures held by the Canada Pension Plan Investment Fund. Such securities are payable 20 years after their respective dates of issue, are not negotiable, transferable or assignable, but are redeemable in whole or in part before maturity at the option of the Minister of Finance of Canada, on six months’ prior notice, when he deems it necessary in order to meet the requirements of the Canada Pension Plan. At March 31, 2002 and 2003, the amounts of such debentures were $1,260 million and $1,128 million, respectively.

     (4) Debt for general government programs consists of the total direct funded debt of the Province less debt issued for self-sustaining purposes.

     For additional information as to the direct funded debt of the Province, see “Tables of Supplementary Information — Table V.”

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Guaranteed Debt of the Province

      The following table summarizes the guaranteed debt of the Province by currency and purpose of issue as at March 31 for the years 1999 through 2003.

GUARANTEED DEBT OF THE PROVINCE (1)

			As at March 31,
			1999		2000		2001		2002		2003
			(In thousands of dollars)
Guaranteed Debt Payable in:
	Canadian Dollars			$479,632		$421,219		$416,102		$595,190		$979,202
	U.S. Dollars			296,709		—		—		—		—
		Total Guaranteed Debt		776,341		421,219		416,102		595,190		979,202
		Less: Sinking Funds and Other Related Trust Funds		175,118		180,473		25,084		25,447		26,292
	Net Guaranteed Debt (2)			$601,223		$240,746		$391,018		$569,743		$952,910
Issued by:
	The Manitoba Hydro-Electric Board			$592,600		$231,699		$382,086		$562,014		$944,831
	Other			8,623		9,047		8,932		7,729		8,079
		Net Guaranteed Debt (2)		$601,223		$240,746		$391,018		$569,743		$952,910

     (1) Debentures payable in U.S. dollars are stated at the Canadian dollar equivalent using the exchange rate in effect on March 31 each year adjusted for any foreign currency contracts entered into for settlement after those dates.

     (2) The table does not include contingent obligations in the amount of $17.1 million as at March 31, 2003, comprised of $0.6 million of mortgages, and $16.5 million of bank lines of credit.

     For additional information as to guaranteed debt, see “Tables of Supplementary Information — Table VI.”

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Maturity Schedule

      The following table sets forth the maturity schedule by currency of the direct funded and guaranteed debt of the Province as at March 31, 2003:

MATURITY SCHEDULE

DIRECT AND GUARANTEED DEBT (1)

							Estimated
	Canadian		U.S.		Gross		Sinking Funds		Net
Years Ending March 31,	Dollars (2)		Dollars (2)(3)		Maturities		Withdrawal		Maturities
	(In millions of dollars)
Short-Term Debt		$628		$—		$628		$—		$628
2004		2,066		529		2,595		1,167		1,428
2005		1,310		71		1,381		480		901
2006		1,525		297		1,822		141		1,681
2007		1,503		735		2,238		214		2,024
2008		1,218		—		1,218		261		957
		8,250		1,632		9,882		2,263		7,619
2009-2013		3,546		1,014		4,560		1,574		2,986
2014-2023		2,264		1,599		3,863		1,984		1,879
2024-2042		2,080		—		2,080		10		2,070
		$16,140		$4,245		$20,385		$5,831		$14,554

     (1) The table does not include contingent obligations in the amount of $17.1 million as at March 31, 2003, comprised of $0.6 million of mortgages, and $16.5 million of bank lines of credit.

     (2) Debt payable in Canadian dollars and U.S. dollars includes debt swapped from other currencies.

     (3) Debt payable in U.S. dollars (U.S.$2.89 billion) is stated at the Canadian dollar equivalent at March 31, 2003.

Sinking Funds

      The Minister of Finance may provide for the creation and management of sinking funds for the orderly retirement of debt. The Minister of Finance may authorize, by directive, the amount, if any, to be allocated to the Province’s sinking fund. The amount allocated to the sinking fund by the Province for the fiscal year ended March 31, 2003, was $686.8 million. Currently, the Province’s sinking fund is invested principally in securities issued or guaranteed by Canadian provinces.

      Manitoba Hydro is required by statute to provide, prior to its fiscal year end in each year, amounts for sinking funds which are not less than the sum of (a) 1% of the debt of and Provincial advances to Manitoba Hydro outstanding at the preceding fiscal year end and (b) 4% of the balance of cash and book value of securities in the sinking fund at such date. Interest earned on money and securities in the sinking fund is paid to Manitoba Hydro.

Unfunded Debt

      The unfunded debt of the Province as at March 31, 2003 amounted to $1,105 million, including $411 million of accounts payable, $239 million of accrued interest and $455 million of other accrued charges. This unfunded debt was offset by current assets of the Province in the amount of $730 million, represented by $340 million of March 2003 tax revenue receivables, $105 million of other receivables, $68 million of interest receivable and $143 million of accounts receivable from the Federal and other governments and $167 million in cash and equivalents, less a valuation allowance of $93 million.

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Consolidated Funded Debt of the Manitoba Public Sector

      The Province supervises all financial activities of the Manitoba public sector. Certain public sector entities issue debt in their own names, which is not guaranteed by the Province. Accordingly, not all funding within the public sector is reflected in the Province’s financial statements. The following table sets forth the consolidated funded debt of the Manitoba public sector at March 31 for each of the years 1999 through 2003.

CONSOLIDATED FUNDED DEBT OF THE MANITOBA PUBLIC SECTOR

			As at March 31,
			1999			2000			2001			2002			2003
			(In millions of dollars)
Issued for the purpose of:
	General Government Programs			$9,733			$9,981			$9,955			$10,147			$10,373
		Less Sinking Funds		(2,959	)		(3,263	)		(3,158	)		(3,496	)		(3,723	)
	Net General Government Programs			6,774			6,718			6,797			6,651			6,650
	The Manitoba Hydro-Electric Board			7,009			7,503			7,655			7,845			7,382
		Less Sinking Funds		(1,295	)		(1,470	)		(1,374	)		(1,547	)		(1,004	)
	Net Manitoba Hydro-Electric Board			5,714			6,033			6,281			6,298			6,378
	Other Crown Organizations and Public Sector Entities			4,974			5,242			5,213			5,062			4,502
		Less Sinking Funds		(2,113	)		(2,297	)		(2,142	)		(1,976	)		(1,578	)
	Net Other Crown Organizations and Public Sector Entities			2,861			2,945			3,071			3,086			2,924
	Net Public Sector Debt			$15,349			$15,696			$16,149			$16,035			$15,952
Consisting of:
	Direct Debt of the Province (1)			$18,595			$19,614			$19,723			$19,920			$18,959
	Guaranteed Debt of the Province (1)			776			421			416			595			979
	Non-Guaranteed Debt of Crown Organizations and Other Public Sector Entities			2,345			2,691			2,684			2,539			2,319
Total Public Sector Debt				21,716			22,726			22,823			23,054			22,257
	Less: Accumulated Sinking Funds			(6,367	)		(7,030	)		(6,674	)		(7,019	)		(6,305	)
		Net Public Sector Debt		$15,349			$15,696			$16,149			$16,035			$15,952

     (1) U.S. and other foreign currency debt included in the Direct Debt of the Province and the Guaranteed Debt of the Province are stated at the Canadian dollar equivalent using the exchange rates in effect on March 31 each year.

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Selected Debt Information

      The following table sets forth certain information as to the funded debt of the Province as well as debt issued for general government programs (all net of accumulated sinking funds) as at March 31 for the years 1999 through 2003, including per capita data based upon population at July 1 of the preceding calendar year:

PUBLIC SECTOR DEBT INFORMATION

		As at March 31,
		1999			2000			2001			2002			2003
Total Net Consolidated Funded Debt of the Manitoba Public Sector (in millions)			$15,349			$15,696			$16,149			$16,035			$15,952
	Per Capita		13,429			13,696			14,055			13,931			13,719
	As a Percent of Personal Income		58.3	%		58.2	%		56.7	%		54.5	%		52.6	%
	As a Percent of Gross Domestic Product		49.5			49.2			47.7			45.7			43.5
Total Net Direct Funded Debt of the Province (in millions)			$12,797			$13,218			$13,765			$13,833			$13,601
	Per Capita		11,196			11,534			11,980			12,018			11,697
	As a Percent of Personal Income		48.6	%		49.0	%		48.3	%		47.1	%		44.8	%
	As a Percent of Gross Domestic Product		41.3			41.4			40.7			39.4			37.1
Net Debt Issued for General Government Programs (in millions)			$6,774			$6,718			$6,798			$6,651			$6,649
	Per Capita		5,927			5,862			5,916			5,778			5,718
	As a Percent of Personal Income		25.7	%		24.9	%		23.9	%		22.6	%		21.9	%
	As a Percent of Gross Domestic Product		21.9			21.0			20.1			19.0			18.1
Net Cost of Servicing General Government Program Debt as a Percent of Provincial Revenue			8.5	%		7.1	%		7.6	%		6.1	%		4.6	%

Pension Liability

      The Government is required by legislation to pay 50% of the pension disbursements made to retired Provincial employees (with the exception of the share payable by Government agencies for their employees) and to retired contributors to the Teachers’ Retirement Allowances Fund (TRAF). Such payments are charged to departmental appropriations as incurred. Prior to March 31, 2001, no provision was made to fund current or past service obligations of the Government to the Civil Service Superannuation Fund (CSSF) or to the TRAF. The reserves held in these Funds represent only the employees’ obligation towards the total pension liability, except as described in the following paragraph.

      Certain amendments to the Civil Service Superannuation Act were made in 1992, which required that the CSSF establish and fund a separate account in an amount sufficient to cover the Province’s actuarial costs of the 1992 amendments to the Act. The CSSF account maintained on behalf of the Province at March 31, 2003 was $30 million ($29 million in 2002).

      An actuarial valuation and report of the Government’s liability to the CSSF was completed as at December 31, 2001. The report also provided a formula to update the liability on an annual basis. In accordance with this formula, the Government’s actuarial liability to the CSSF has been calculated on an indexed basis at $1,501 million as at March 31, 2003 ($1,406 million in 2002).

      An actuarial report for TRAF was completed as of January 1, 2001 and provides a formula to update the Government’s pension liability, resulting in an actuarial liability on an indexed basis of $1,878 million at March 31, 2003 ($1,780 million in 2002).

      Currently, the Province allocates a portion of its annual payments to the Debt Retirement Fund to fund its unfunded pension liability and sets aside funding for the pension costs of all new employees. These amounts have been transferred to the Pension Assets Fund which was established to provide for the future retirement of the government’s pension liability.

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      The Pension Plan for Members of the Legislative Assembly (MLAs) provides MLAs elected prior to April 25, 1995 defined pension benefits based on years of service. For those elected after April 25, 1995, the Act provides for defined contribution benefits as well as defined pension benefits for service prior to April 25, 1995. An actuarial valuation was completed as of March 2000 and provides a formula to update the liability on an annual basis. The Government’s liability is calculated to be $32 million at March 31, 2003 ($31 million in 2002).

      The estimated pension liability for the Government and Crown organizations, including unamortized actuarial gains and losses (which does not include Government enterprises such as Manitoba Hydro), may be summarized as follows:

	As at March 31,
	2002		2003
	(In millions of
	dollars)
Civil Service Superannuation Fund	$	1,406	$	1,501
Members of Legislative Assembly		31		32
Teachers’ Retirement Allowances Fund		1,780		1,878
Total	$	3,217	$	3,411

      Manitoba Hydro employees are eligible for pensions under the Civil Service Superannuation Act, which requires Manitoba Hydro to contribute 50% of the pension disbursements, made to retired employees. Based on an actuarial formula, Manitoba Hydro and its subsidiaries have a liability for pension obligations at March 31, 2003 of approximately $479 million ($422 million as at March 31, 2002), of which $457 million was funded. These amounts are not included in the above totals.

THE MANITOBA HYDRO-ELECTRIC BOARD

      The Manitoba Hydro-Electric Board (“Manitoba Hydro”) was established in 1949 by an Act of the Legislature of the Province as an agent of the Crown of the Province to provide for a supply of electrical power adequate for the needs of Manitoba, and to promote economy and efficiency in the generation, distribution, supply and use of electrical power within Manitoba.

      In 1997, amendments were made to the Manitoba Hydro Act to allow wholesale competition and transmission access in the Manitoba electrical market and allow Manitoba Hydro to offer new products and services, create subsidiaries and enter into joint ventures and business alliances. The amendments also provided Manitoba Hydro with explicit authority to build new generation for export.

      In 1999, Manitoba Hydro purchased Centra Gas Manitoba Inc. (“Centra Gas”), the primary gas distribution utility in Manitoba with approximately 251,000 residential, commercial and industrial customers.

      In August 2002, amendments were made to the Manitoba Hydro Act providing for the distribution from Manitoba Hydro to the Province of Manitoba of up to $288 million by the end of the 2003-04 fiscal year. Total payments and provisions in the 2002-03 fiscal year amounted to $203 million. The Manitoba Hydro Act provided that the amount of distribution for the 2003-04 fiscal year would be the lesser of $85 million or 75% of net income. Based on the current net loss projection, Manitoba Hydro is not expected to make a distribution in 2004.

      In September 2002, Manitoba Hydro purchased all of the assets and liabilities of Winnipeg Hydro from the City of Winnipeg. The primary financial terms of the purchase were that Manitoba Hydro received all generating, transmission, distribution, and business assets, incurred net debt obligations related to Winnipeg Hydro of $133 million, and agreed to make cash payments to the City of Winnipeg equal to $25 million per year for the first five years, $20 million per year for the following four years, and then $16 million per year in perpetuity. In addition, Manitoba Hydro is obligated to commence construction of a minimum 400,000 square foot office complex in downtown

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Winnipeg within five years of the date of purchase. Winnipeg Hydro operated two hydraulic generating stations which added a capability of 144 megawatts to the system capacity.

      As a result of the Winnipeg Hydro acquisition, Manitoba Hydro is now serving electric customers throughout the entire Province of Manitoba. The electrical systems of Manitoba Hydro and Winnipeg Hydro are interconnected and operate as an integrated system.

      Manitoba Hydro currently provides electricity to approximately 500,000 customers and natural gas service to approximately 251,000 customers within the province. In addition, it exports electricity to over 40 electric utilities in the U.S., Ontario and Saskatchewan.

      At March 31, 2003, Manitoba Hydro’s total generating capability was 5,475 megawatts. Of this generating capability, hydro-electric stations represented 91.3%, thermal-electric (natural gas and coal) stations 8.5% and diesel-electric stations 0.2%. The diesel electric stations served four isolated communities in northern Manitoba that are too remote to be served from the integrated system.

      For the fiscal year ended March 31, 2003, 88.7% of the Manitoba integrated system energy supply of 32.2 billion kilowatt-hours was provided by self-renewing hydro-electric generation. The portion of total supply provided by thermal generation was 1.9% and by imports was 9.4%.

Operations

      Net income from consolidated operations for the fiscal year ended March 31, 2003 was $71 million, compared to the net income of $214 million in the previous fiscal year. The decrease was mainly due to a decline in hydraulic generation stemming from lower water flows which resulted in reduced electricity sales to extraprovincial customers and increased energy purchases to support firm supply commitments. Net income for fiscal year 2002 was significantly above normal due to unusually high water levels and high export prices.

      Manitoba Hydro reported a net loss of $51 million for the quarter ended June 30, 2003 versus net income of $6 million for the same three-month period last year. The net loss was attributable to a continuation of low water flows on Manitoba’s major river systems. Low water flow conditions have persisted into the second quarter resulting in lower export revenues and increased power purchase costs. Current projections are that Manitoba Hydro will incur a net loss between $200 and $350 million for the 2003-04 fiscal year.

Electricity

      As at March 31, 2003, Manitoba Hydro owned and operated 14 hydro-electric generating stations having a total installed electric generating capability of 4,999 megawatts, including five stations with a total capability of 3,926 megawatts located on the Nelson River. Manitoba Hydro also operated two thermal-electric generating stations having a total installed capability of 467 megawatts and four isolated diesel sites having an installed capacity of 9 megawatts.

      As at March 31, 2003, the high voltage transmission facilities of Manitoba Hydro consisted of approximately 11,424 circuit kilometers, representing a total investment of $715 million.

      For purposes of exporting firm energy and for the interchange of power on a short-term basis to provide for economy of operations and system emergencies, Manitoba Hydro maintains interconnections with power facilities in the Provinces of Saskatchewan and Ontario and in the States of North Dakota and Minnesota. Manitoba Hydro’s interconnections with Saskatchewan have a total transfer capability of 450,000 kilowatts and interconnections with Ontario have a transfer capability of 263,000 kilowatts. The interconnections with the United States have a total transfer capability of 2,250,000 kilowatts.

      During the fiscal year ended March 31, 2003, Manitoba Hydro sold a total of 28.6 billion kilowatt-hours of electricity, representing a decrease of 2.0% from the fiscal year ended March 31, 2002. Scheduled extraprovincial sales accounted for 9.7 billion kilowatt-hours, or 34.0% of total electricity sales for the fiscal year ended March 31, 2003.

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Natural Gas

      Centra Gas provides natural gas distribution and related energy services to approximately 251,000 customers that are located in nearly 100 communities throughout southern Manitoba. Centra Gas owns a network of transmission (1,672 kilometers) and distribution (6,634 kilometers) mains to meet the natural gas requirements of its customers.

      For the year ended March 31, 2003, Centra Gas had total gas deliveries of 82.4 billion cubic feet. These gas deliveries were comprised of 25.2 billion cubic feet to residential customers, 34.6 billion cubic feet to commercial and industrial customers and 22.6 billion cubic feet of transportation deliveries.

Rate Matters

      Manitoba Hydro’s rates for electricity sales within the province are set on a cost of service basis and are subject to review and approval by The Public Utilities Board of Manitoba (“PUB”). In November 2001, the Province of Manitoba passed legislation to equalize Manitoba’s rural and urban electricity rates. The rate decrease to rural customers will reduce electric revenues by approximately $14 million per year. In June 2003, a PUB order directed Manitoba Hydro to decrease rates 1% for general service small customers and 2% for general service large customers. Such decreases would result in a further reduction to Manitoba Hydro’s electric revenue of approximately $7 million per year. Manitoba Hydro filed an appeal with the PUB regarding the rate decrease and a decision regarding the appeal is pending. Other than these items, there have been no changes in rates for large industrial customers since 1992 and for residential customers since 1997.

      Centra Gas files quarterly rate applications with the PUB based on the twelve-month forward price for Western Canadian gas supplies, which are designed to pass through to customers the full impact of gas price changes. Effective April 1, 2003, Centra implemented a 0.4% general rate increase related to the non-gas costs of operating the utility. This is the first general rate increase implemented by Centra since it was acquired by Manitoba Hydro in 1999.

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Statistical Information

      The following table sets forth certain statistical information for the last five years.

				Year Ended March 31,
				1999			2000			2001			2002			2003
Electricity
Installed Generating Capability Including Winnipeg Hydro (in megawatts)					5,148			5,124			5,219			5,240			5,475
Manitoba Firm Peak Demand (in Megawatts)					3,559			3,524			3,637			3,760			3,916
Manitoba & Winnipeg Hydro System Electric Energy (in millions of kilowatt- hours)
	Generated				30,060			30,155			32,697			32,643			29,178
	Purchased				735			464			333			1,512			3,043
					30,795			30,619			33,030			34,155			32,221
Electric Energy Sales (1) (in millions of kilowatt-hours)
	Manitoba				16,288			15,777			16,653			16,916			18,907
	Extraprovincial				11,404			10,911			12,154			12,298			9,735
			Total Electric Energy Sales		27,692			26,688			28,807			29,214			28,642
Revenue from Sale of Power (in thousands of dollars)
	Manitoba				$748,277			$737,230			$781,064			$786,036			$875,841
	Extraprovincial				326,200			376,570			479,673			587,893			463,428
			Total Revenue from Sale of Power		$1,074,477			$1,113,800			$1,260,737			$1,373,929			$1,339,269
Number of Customers (at end of period)					398,863			402,023			403,040			405,535			501,975
Average Revenue per kilowatt-hour
	Manitoba				4.59	¢		4.67	¢		4.69	¢		4.65	¢		4.63	¢
	Extraprovincial				2.86			3.45			3.95			4.78			4.76
Average Cost per kilowatt-hour of Electric Energy Sold (excluding finance expense)					2.05	¢		2.13	¢		2.12	¢		2.44	¢		2.92	¢
Natural Gas (2)
Gas Deliveries (in billions of cubic feet)
	Residential							18.7			24.7			22.8			25.2
	Commercial/ Industrial							25.6			34.4			31.7			34.6
	Transportation							12.9			17.6			17.7			22.6
			Total Gas Deliveries					57.2			76.7			72.2			82.4
Number of Customers (at end of period)								245,761			248,074			249,351			251,273
Revenue from Sale of Natural Gas (in thousands of dollars)
	Residential							$136,763			$239,969			$224,704			$247,413
	Commercial/ Industrial							129,482			258,672			248,045			260,832
	Transportation							1,388			1,836			4,127			4,016
	Other							1,074			2,803			2,471			2,587
		Total Revenue from the Sale of Natural Gas						$268,707			$503,280			$479,347			$514,848

     (1) Manitoba energy sales are based on the net energy transfer to Winnipeg Hydro to the September 3, 2002 acquisition date and exclude internal energy use. Extraprovincial energy sales and power purchased are

34

based on scheduled energy deliveries and exclude energy supplied out of province for delivery out of province.

     (2) Statistics are based on Centra Gas operations from the July 30, 1999 acquisition date.

     For information with respect to the operating financial results, balance sheet and statement of changes in financial position of Manitoba Hydro, see “Tables of Supplementary Information — Tables VII, VIII and IX.”

Construction Program

      The following table summarizes Manitoba Hydro’s capital expenditure for improvements and expansion of its facilities during the four-year period ended March 31, 2003, and the estimated capital expenditure to meet future demands for electricity and natural gas in the province during the five-year period ending March 31, 2008.

CAPITAL EXPENDITURE

	Year Ending March 31, (in thousands of dollars)
									Estimated
	2000		2001		2002		2003		2004		2005		2006-2008
Electricity
Generating Plant		$63,933		$109,811		$153,070		$153,982		$146,835		$115,561		$299,490
Major Transmission & Stations		107,025		81,102		95,169		116,447		134,733		122,480		374,311
Distribution & Other		150,880		150,148		171,743		192,366		195,820		213,415		581,414
Natural Gas
Distribution & Other		7,613		21,121		18,740		21,658		20,400		21,800		62,400
		$329,451		$362,182		$438,722		$484,453		$497,788		$473,256		$1,317,615

      Capital expenditures, excluding new generation and transmission expenditures, are estimated to be $1,965 million for the five-year period ending March 31, 2008. Manitoba Hydro expects internally generated funds to be $1,644 million or approximately 84% of total capital expenditures during this period. These amounts do not include any of the possible new hydraulic projects discussed below.

      In July 2002, commissioning of two natural gas fired combustion turbines (“CT”) with a total capacity of 260 MW was completed. The total capital cost of constructing the CT’s and associated equipment was $191 million. The new CT’s allow Manitoba Hydro to optimize the operations of the hydraulic generating stations and provide for increased system reliability during periods of drought.

      In April 2003, Manitoba Hydro and Shell Canada entered an agreement to jointly explore the development, construction, ownership and operation of wind power generation opportunities in Manitoba. Manitoba Hydro has installed seven wind monitoring sites throughout the province to collect information on wind conditions in order to evaluate wind generation opportunities.

      Manitoba Hydro has five generating stations with a total installed generating capability of 3,926 megawatts along the Nelson River. Manitoba Hydro estimates the total potential hydro-electric generating capacity of the overall Nelson River development to be in excess of 7,500 megawatts

      It is projected that no new major hydraulic generation will be required to serve the Manitoba domestic market and committed export requirements until at least 2019. Manitoba Hydro is actively exploring the feasibility of building one or more new hydro-electric generating stations prior to that date in order to take advantage of export market opportunities. Nonbinding agreements in principle that involve partnership arrangements and equity participation have been reached with First Nations in the vicinity of these projects. In April 2003, Manitoba Hydro filed an application with the Clean Environment Commission to proceed with the Wuskwatim project for in-service date of 2009 or later.

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      In June 2003, Manitoba and Ontario signed a memorandum of understanding to support a feasibility study to be conducted by Hydro One (of Ontario) and Manitoba Hydro for the development of the 1,250-megawatt Conawapa generating station and the construction of high-voltage transmission line between the two provinces. The feasibility study is scheduled to be completed by the end of 2003.

      As a result of Manitoba Hydro’s generation and transmission activities in the past, a number of communities have experienced adverse impacts. In an effort to provide fair compensation to these communities, Manitoba Hydro has been engaged in discussions to reach agreements in principle and settlement agreements. As of March 31, 2003, Manitoba Hydro has committed $511 million for remedial works, compensation and/or mitigation initiatives, negotiated settlement agreements with four of the five communities covered by the 1977 Northern Flood Agreement (“NFA”) and reached compensation/mitigation agreements with numerous communities outside the NFA.

      On December 16, 2002, a plan was announced between Manitoba, Manitoba Hydro and Pimicikamak Cree Nation representatives from the Cross Lake First Nation, the fifth NFA community, containing NFA implementation initiatives to be put in place over the following 15 months. In addition, discussions are ongoing to reach concluding arrangements with the remaining communities not covered by the NFA.

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MANITOBA INTEGRATED SYSTEM

EXISTING AND POTENTIAL GENERATING STATIONS

EXISTING GENERATING STATIONS

Generating Station	River	Winter Capability
		(in Megawatts)
Jenpeg	Nelson		131
Kelsey	Nelson		225
Kettle	Nelson		1,220
Long Spruce	Nelson		1,010
Limestone	Nelson		1,340
Pine Falls	Winnipeg		88
Great Falls	Winnipeg		131
McArthur Falls	Winnipeg		55
Seven Sisters	Winnipeg		165
Slave Falls	Winnipeg		67
Pointe Du Bois	Winnipeg		77
Grand Rapids	Saskatchewan		479
Laurie River I and II	Laurie		10
Total Hydraulic Capability			4,998
Brandon & Selkirk Thermal			467
Total Integrated System Capability			5,465

POTENTIAL HYDRAULIC SITES (1)

Conawapa	Nelson	1,250
Gillam Island	Nelson	820
Gull	Nelson	620
Whitemud	Nelson	310
Red Rock	Nelson	190
Wuskwatim	Burntwood	200
Manasan	Burntwood	195
First Rapids	Burntwood	225
Notigi	Burntwood	100
		3,910
Total		9,375

     (1) Net capacity addition to the integrated system.

Export Power Sales

      Manitoba Hydro has a contract with Northern States Power Company (“NSP”), (a subsidiary of Xcel Energy), for the export of 500 megawatts of firm power until 2005. In August 2002, Manitoba Hydro signed a ten-year replacement agreement with NSP for the sale of 500MW of firm power commencing in 2005.

      Manitoba Hydro has signed 150 megawatt Seasonal Diversity Exchange Agreements with United Power Association and with NSP, which will continue until 2015 and 2019, respectively. A third Seasonal Diversity Exchange for 200 megawatts with NSP will continue until 2016. These Seasonal Diversity Exchange Agreements provide that power may be exported from Manitoba in the summer months and returned to Manitoba in the winter months.

      Other long-term export power sales include:

• 50 megawatt sale to Otter Tail Power 1997-2005

• 50 megawatt sale to Otter Tail Power 2000-2010

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• Sale to Minnesota Municipal Power Agency 2000-2012:

• 60 megawatts from 2000-2009

• 30 megawatts from 2010-2012

• 100 megawatt sale to Wisconsin Public Service 2002-2007

• 50 megawatt sale to Great River Energy 2002-2007

      In late 1996, Manitoba Hydro became a member of the Mid-Continent Area Power Pool (“MAPP”) which provides access to a market of over 70 entities. Under the MAPP agreement, contracts have been entered into with utilities in Minnesota, North Dakota, Wisconsin and with United States marketers. Manitoba Hydro makes short-term power sales on an on-going basis to SaskPower, Ontario Power Generation Inc. and numerous utilities and marketers in the upper mid-west United States and in Canada. Manitoba Hydro has a credit exposure management program and monitors the creditworthiness of and exposures to export sales customers in order to minimize credit risk.

      In September 2001, Manitoba Hydro announced it had reached a Coordination Agreement with the Midwest Independent Transmission System Operator, Inc. (“the Midwest ISO”) which allows Manitoba Hydro to participate in the Midwest ISO. The Midwest ISO began full operations in February 2002. The relationship with the Midwest ISO provides Manitoba Hydro with non-discriminatory transmission access to the membership base of the Midwest ISO. From its headquarters in central Indiana, the Midwest ISO serves as an independent agent for its transmission-owning members, and, with the inclusion of committed operations, controls an interconnected transmission grid encompassing more than 122,000 megawatts of generation capacity over 111,000 miles of high voltage transmission lines in all or parts of 15 states and parts of Canada.

      In recent years, deregulation in the United States and increasing competition have substantially changed the market environment in which Manitoba Hydro operates. In response to these changes, the 1997 amendments to the Manitoba Hydro Act were enacted and Manitoba Hydro has, among other things, restructured itself into distinct business units, obtained full membership in MAPP, entered into a Coordination Agreement with the Midwest ISO, and implemented an open access tariff for wholesale transactions. Manitoba Hydro is actively pursuing new business opportunities, and believes that its cost structure and geographic location position it to compete effectively in the new market environment.

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CANADIAN FOREIGN EXCHANGE

      Canada maintains a floating exchange rate. Average noon spot exchange rates against the U.S. dollar, in which direct and guaranteed debt of the Province is denominated, expressed in Canadian dollars, are shown in the table below for the calendar year 1998 through 2002.

	Average Noon Spot Rates
Foreign Currency	1998		1999		2000		2001		2002
	(Canadian dollars per unit of foreign currency)
United States Dollars (1)		$1.4831		$1.4858		$1.4852		$1.5484		$1.5704

     (1) The high and low spot rates for the U.S. dollar expressed in Canadian dollars are as follows:

	1998		1999		2000		2001		2002
High		$1.5845		$1.5475		$1.5632		$1.6050		$1.6132
Low		1.4040		1.4420		1.4378		1.4901		1.5110

     Source: Bank of Canada.

     At March 31, 2003, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.4693.

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TABLES OF SUPPLEMENTARY INFORMATION

		Page
I.	Statement of Operating Fund Revenue		41
II.	Statement of Operating Fund Expenses		43
III.	Summary Financial Statements
	— Summary Statement of Revenue and Expense		45
	— Summary Statement of Financial Position		46
IV.	Summary Financial Statements — Government Enterprises
	— Summary of Operating Results and Financial Position		47
V.	Statement of Direct Funded Debt of the Province		48
VI.	Statement of Securities Guaranteed by the Province		54
VII.	Manitoba Hydro Consolidated Statement of Operations		55
VIII.	Manitoba Hydro Consolidated Balance Sheet		56
IX.	Manitoba Hydro Consolidated Statement of Changes in Financial Position		57

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I. STATEMENT OF OPERATING FUND REVENUE

											Budget
											Estimate
		2000		2001		2002		2003			2004
		(In thousands of dollars)
Federal Transfers
	Equalization		$1,271,747		$1,339,236		$1,399,151		$1,337,625			$1,387,900
	Health and Higher Education Cash Transfer		509,247		638,017		685,236		773,489			995,900
	Canada Health and Social Transfer		130,595		—		—		—			—
	Other		161,506		114,112		122,046		118,609			124,150
			2,073,095		2,091,365		2,206,433		2,229,723			2,507,950
Income Taxes
	Individual Income Tax		1,611,231		1,756,647		1,658,962		1,636,187			1,703,000
	Corporation Income Tax		306,819		444,127		306,381		160,513			270,200
	Succession Duty and Gift Tax		40		40		359		142			—
			1,918,090		2,200,814		1,965,702		1,796,842			1,973,200
Other Corporation Taxes
	Corporation Capital Tax		134,544		124,182		132,431		139,340			148,300
	Insurance Corporations Tax		39,683		41,764		43,227		48,501			44,973
	Levy for Health and Education		225,255		238,785		244,416		257,282			263,400
			399,482		404,731		420,074		445,123			456,673
Sales Taxes
	Retail Sales Tax		917,667		932,783		965,560		1,006,584			1,057,800
	Commercial Energy Consumption Tax		56,966		67,981		65,924		71,072			69,000
			974,633		1,000,764		1,031,484		1,077,656			1,126,800
Luxury Taxes
	Liquor Control Commission		156,304		158,613		163,316		166,347			173,300
	Tobacco Tax		112,532		121,478		138,302		180,509			190,400
	Lottery Revenue		225,043		238,455		248,234		265,484			259,500
			493,879		518,546		549,852		612,340			623,200
Gasoline and Motive Fuel Taxes			218,433		223,548		222,871		231,191			231,300
Natural Resource Revenue
	Oil and Minerals Taxes and Royalties		17,097		57,003		19,135		27,331			25,626
	Water Power Rental Charges		48,725		53,369		109,300		96,547			93,784
	Forestry		6,405		6,045		6,535		7,580			6,821
	Fisheries and Wildlife		294		340		254		217			313
	1997 Flood Proofing Program		148		1,129		660		(37	)		124
	Other		20,907		20,706		19,825		22,253			18,451
			93,576		138,592		155,709		153,891			145,119
Manitoba Hydro Retained Earnings Distribution			—		—		—		203,468			52,000
Other Fees, Permits, Licenses and Taxes
	Motor Vehicles and Drivers’ Licenses		69,712		71,858		72,439		81,161			90,472
	Crown Corporations		4,090		5,626		7,646		8,150			7,850
	Fines and Other Legal Fees		20,512		23,446		23,560		21,818			25,906
	Land Transfer Tax		12,049		12,392		13,647		15,370			14,100
	Other		48,329		50,340		67,859		83,849			48,979
			154,692		163,662		185,151		210,348			187,308

41

I. STATEMENT OF OPERATING FUND REVENUE — (continued)

										Budget
										Estimate
		2000		2001		2002		2003		2004
		(In thousands of dollars)
	Sales of Goods and Services		3,291		495		132		65		150
	Conditional Transfers from Municipalities		8,630		9,541		9,375		9,541		10,182
			166,613		173,698		194,658		219,954		197,640
Total Revenue before Transfers and Extraordinary Item			6,337,801		6,752,058		6,746,783		6,970,188		7,313,882
Extraordinary Item — Adjustment to estimate for Federal accounting error			—		—		—		51,141		—
Total Revenue			$6,337,801		$6,752,058		$6,746,783		$7,021,329		$7,313,882

     (1) See notes to “Statement of Operating Fund Transactions”

42

II. STATEMENT OF OPERATING FUND EXPENSES

										Budget
										Estimate
		2000		2001		2002		2003		2004 (5)
		(In thousands of dollars)
Health and Community Services
	Health		$2,310,004		$2,507,752		$2,669,381		$2,830,091		$3,004,229
	Community Support Programs		6,295		5,953		5,793		5,497		—
	Family Services and Housing		743,290		774,255		810,484		835,996		869,407
	Seniors Directorate		918		770		713		689		723
	Status of Women		1,124		1,079		1,112		1,077		1,086
	Healthy Child Manitoba (1)		6,029		12,488		16,510		20,599		21,938
			3,067,660		3,302,297		3,503,993		3,693,949		3,897,383
Education
	Education and Training		1,187,354		1,265,908		1,288,295		1,347,076		1,411,823
Economic and Resource Development
	Agriculture and Food		205,568		161,969		116,807		120,609		126,632
	Sport		10,546		11,463		10,263		10,280		10,687
	Transportation and Government Services		292,173		297,542		301,249		327,063		341,068
	Industry, Trade and Mines		88,134		45,698		40,910		31,485		31,083
	Conservation		140,695		148,484		144,848		141,443		128,049
	Aboriginal and Northern Affairs		20,687		22,887		23,976		30,324		28,704
	Enabling Appropriations		21,289		30,175		2,866		2,956		96,765
	Energy Science & Technology (2)		—		—		—		22,557		44,028
	Urban Economic Development Initiatives		14,459		—		—		—		—
			793,551		718,218		640,919		686,717		807,016
Consumer Services, Public Protection and Other Government Services
	Justice		211,666		224,704		238,664		244,461		254,114
	Culture, Heritage and Tourism		59,240		58,486		58,791		59,004		66,840
	Civil Service		56,934		47,458		70,080		67,798		69,687
	Consumer and Corporate Affairs (3)		8,903		9,059		9,129		—		—
	Executive Council		4,301		3,266		3,280		3,424		3,426
	Finance (3)		48,264		45,191		46,525		60,013		47,315
	Legislative Assembly		28,908		21,180		22,089		23,057		23,359
	Labor and Immigration		21,691		24,134		25,214		26,127		26,954
	Flood Control and Emergency Expenditures		136,180		24,400		37,903		34,432		25,000
	Millennium Fund		2,474		—		—		—		—
	Capital Initiatives		50,874		5,398		9,024		9,559		—
	Canada-Manitoba Infrastructure Program		5,301		—		—		—		—
			634,736		463,276		520,699		527,875		516,695
Manitoba Tax Credit Programs			177,725		218,102		233,344		216,481		230,652
Intergovernmental Affairs			110,043		135,753		134,624		143,436		145,768
Allowance for Losses and Expenditures incurred by Crown organizations			236		958		1,585		6,761		790
Public Debt
	Net Cost of Servicing Total
	Direct Public Debt (Interest, foreign exchange, etc. after deducting recoveries from Crown organizations and short-term investment earnings)		465,322		510,723		414,128		321,420		331,000

43

II. STATEMENT OF OPERATING FUND EXPENSES — (continued)

											Budget
											Estimate
			2000		2001		2002		2003		2004 (5)
			(In thousands of dollars)
		Total Expenses Before Transfer to Debt Retirement Fund (4)		$6,436,627		$6,615,235		$6,737,587		$6,943,715		$7,341,127
	Capital			381,819		364,921		329,771		309,646		376,273
	Operating			6,054,808		6,250,314		6,407,816		6,634,069		6,964,854
Total Expenses Before Transfer to Debt Retirement Fund (4)				$6,436,627		$6,615,235		$6,737,587		$6,943,715		$7,341,127

     (1) Starting March 31, 2000, Child and Youth Secretariat is part of Healthy Child Manitoba.

     (2) Starting in the 2003 fiscal year, the Department of Energy, Science and Technology was created by transferring branches from the Departments of Conservation, Finance, Education, Health and Industry Trade and Mines.

     (3) Starting in the 2003 fiscal year, Consumer and Corporate Affairs was amalgamated with the Department of Finance.

     (4) See notes to “Statement of Operating Fund Transactions”. Above Budget estimate for fiscal year ended 2004 excludes Year-End Savings.

     (5) Budget Estimate 2004 does not include $78.9 million of Supplementary Estimates of Expenditure, for more information, see “Government Finances”.

44

III. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF REVENUE AND EXPENSE

FOR THE YEAR ENDED MARCH 31, 2003

(with comparative figures for 2002)

			2002			2003
			(In millions of
			dollars)
REVENUE
	Manitoba Collections:
		Retail sales tax		966			1,007
		Fuel taxes		223			231
		Levy for health and education		244			257
		Mining tax		9			18
		Other taxes		401			461
		Fees and other revenue		1,034			1,109
	Government Enterprise Transfers:
		Liquor Control Commission		163			166
		Manitoba Hydro		—			203
		Manitoba Lotteries Corporation		248			266
	Income taxes:
		Corporation income tax		306			160
		Individual income tax		1,659			1,636
	Federal transfers:
		Equalization		1,399			1,338
		Canada Health and Social Transfer		685			756
		Medical Equipment Fund		3			16
		Primary Care Transition Fund		—			1
		Shared cost and other		263			294
TOTAL REVENUE				7,603			7,919
EXPENSES
	Health			2,740			2,955
	Education			1,998			2,059
	Family Services and Housing			893			930
	Community, Economic and Resource Development			908			960
	Justice and Other Government			685			724
	Debt Servicing			502			367
TOTAL EXPENSES				7,726			7,995
NET LOSS BEFORE EXTRAORDINARY ITEM				(123	)		(76	)
Adjustment to estimate for Federal accounting error				—			51
NET LOSS				(123	)		(25	)
Increase (decrease) in equity in government enterprises				113			(159	)
SUMMARY NET LOSS				(10	)		(184	)

45

III. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2003

(with comparative figures for 2002)

			2002			2003
			(millions)
ASSETS
	Cash and cash equivalents			$663			$712
	Temporary investments			200			228
	Amounts receivable			880			730
	Inventories			26			27
	Portfolio investments			30			33
	Loans and advances			579			579
	Equity in government enterprises			1,528			1,369
	Other long-term investments			7			7
	Deferred charge for non-devolved health care facilities (1)			137			133
	Tangible capital assets			1,874			2,001
	Pension assets			107			151
	Assets of non-devolved health care facilities (2)			759			775
TOTAL ASSETS				6,790			6,745
LIABILITIES
	Borrowings			20,682			19,746
		Less: Sinking funds		(6,551	)		(5,875	)
		Less: Debt incurred for and repayable by the Manitoba Hydro-Electric Board and Manitoba Lotteries Corporation		(5,871	)		(5,573	)
				8,260			8,298
		Less: Unamortized foreign currency fluctuation		(143	)		(81	)
	Net borrowings			8,117			8,217
	Accounts payable, accrued charges, provisions and deferrals			1,954			1,913
	Pension liability			3,217			3,411
	Liabilities of non-devolved health care facilities (2)			682			698
TOTAL LIABILITIES				13,970			14,239
ACCUMULATED DEFICIT				$7,180			$7,494

     (1) Prior to the 2000/01 fiscal year, individual health care facilities issued long-term debt in their own name to finance major capital acquisitions. In 2000/01, the Province began a program to finance such debt directly, taking advantage of its superior borrowing power and rates, and lowering the cost of health related borrowings for Manitoba. This debt is included as part of the Province’s general purpose borrowings. The related asset for non-devolved health care facilities is recorded as a deferred charge and amortized over the same period as the term of the debt issue.

     (2) The government has adopted a policy of including the assets, liabilities and equity of health care facilities, which have not devolved their ownership to Regional Health Authorities in its financial statements on a combined basis. However, the annual net income (loss) is recorded in the Summary Statement of Accumulated Deficit instead of the Summary Statement of Revenue and Expense. The assets and liabilities are not adjusted on a basis to be consistent with the accounting policies of the government reporting entity.

46

IV. SUMMARY FINANCIAL STATEMENTS — GOVERNMENT ENTERPRISES (1)

SUMMARY OF OPERATING RESULTS AND FINANCIAL POSITION

FOR THE YEAR ENDED MARCH 31, 2003 *

(with comparative figures for 2002)

												Resource			Total			Total
			Utilities			Insurance			Finance			Development			2003			2002
			(In millions of dollars)
Results of Operations
	Revenues:
		From operations		1,869			868			1,065			—			3,802			3,727
	Expenses:
		From operations		1,319			890			624			4			2,837			2,629
		Debt servicing		479			—			10			—			489			493
	Total Expenses			1,798			890			634			4			3,326			3,122
	Net Income before surplus distribution			71			(22	)		431			(4	)		476			605
	Surplus distribution — Insurance			—			—			—			—			—			(81	)
	Net Income			71			(22	)		431			(4	)		476			524
	Transfers to the government			(203	)		—			(432	)		—			(635	)		(411	)
	Net increase (decrease) in equity in government enterprises			(132	)		(22	)		(1	)		(4	)		(159	)		113
	Net increase (decrease) in equity in government enterprises resulting from:
		Increase (decrease) in equity in government enterprises before surplus distribution														(159	)		194
		Surplus distribution														—			(81	)
		Net increase (decrease) in equity in government enterprises														(159	)		113

*	For enterprises whose fiscal year is prior to March 31, the amounts reflected are as at their fiscal year end.
(1)	Government enterprises consist of the following as at March 31, 2003:

Utilities:

         Manitoba Hydro-Electric Board

Insurance:

         Manitoba Public Insurance Corporation

         Workers Compensation Board

Finance:

         Liquor Control Commission

         Manitoba Lotteries Corporation

         Manitoba Product Stewardship Corporation

Resource Development:

         Leaf Rapids Town Properties Ltd.

         Manitoba Hazardous Waste Management Corporation

47

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE

AS AT MARCH 31, 2003

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
Debenture Loans
(A) Payable in Canadian Dollars:
DA		7-Apr-03		1993		7.875		300,000	(1)
EK		15-Jul-04		1999		5.650		300,000	(1)
DR		15-Nov-04		1994		9.375		500,000	(1)
EN		22-Jun-05		2000		6.250		250,000	(1)
EN		22-Jun-05		2000		6.250		300,000	(1)
DX		5-Jun-06		1996		7.750		250,000	(1)
EI		3-Mar-06		1999		5.250		150,000	(1)
EQ		7-Jun-06		2002		5.250		100,000	(1)
EJ		1-Dec-06		1999		5.100		250,000	(1)
EC		16-May-07		1997		6.625		300,000	(1)
EB		21-May-07		1997		7.000		125,000	(1)
ES		29-Jun-07		2002		4.250		150,000	(1)
ED		2-Jun-08		1997		5.750		300,000	(1)
ED-2		2-Jun-08		1997		5.750		284,060	(1)
ED-3		2-Jun-08		1998		5.750		92,686	(1)
EG		2-Mar-09		1998		5.250		350,000	(1)
EG		2-Mar-09		1999		5.250		150,000	(1)
EL		1-Sep-09		1999		6.250		50,000	(1)
EL		1-Sep-09		1999		6.250		200,000	(1)
EO		25-Jan-11		2001		5.850		325,000	(1)
EO-1		25-Jan-11		2001		5.850		250,000	(1)
CM		15-May-11		1991		10.000		199,827	(1)
CM		15-May-11		1991		10.000		100,000	(1)
ER		3-Dec-12		2002		5.250		250,000	(1)
DE		22-Jul-13		1993		8.500		300,000	(1)
DT		22-Dec-25		1995		7.750		300,000	(1)
CL		5-Mar-31		1991		10.500		599,945	(1)
								6,726,518
Medium-Term Notes:
C017-MTN		2-Jun-03		1998		5.000		50,000	(1)
C010-MTN		18-Sep-03		1997		5.500		25,000	(1)
C039-MTN		3-Jan-05		2002		Floating		25,000	(1)
C045-MTN		22-Mar-04		2002		Floating		25,000	(1)
C043-MTN		8-Mar-05		2002		Floating		20,000	(1)
C042-MTN		15-Apr-05		2002		Floating		75,000	(1)
C054-MTN		5-Dec-05		2002		Floating		15,000	(1)
C041-MTN		7-Feb-06		2002		Floating		85,000	(1)
C051-MTN		18-Oct-06		2002		Variable		15,000	(5)
L007-MTN		28-Feb-07		2003		6.140		20,000	(5)
C025-MTN		12-Mar-07		1999		Floating		20,000	(1)
C008-MTN		24-Apr-07		1997		Floating		9,000	(1)
C048-MTN		17-May-07		2002		Floating		100,000	(1)
C047-MTN		8-Aug-07		2002		Equity		10,000	(1)
L005-MTN		17-Jan-08		2002		Floating Step		30,000	(1)
C044-MTN		2-Jun-08		2002		Floating		50,000	(4)
C050-MTN		15-Oct-08		2002		Step		15,000	(1)
C050-1 MTN		15-Oct-08		2002		Step		10,000	(1)
C022-MTN		15-Jul-10		1998		5.500		40,000	(1)
C038-MTN		15-Nov-13		2001		Step		20,000	(5)
C046-MTN		23-May-14		2002		Step		20,000	(5)

48

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE — (continued)

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
L006-MTN		28-Feb-15		2003		5.600		15,000	(5)
C011-MTN		22-Sep-17		1997		6.500		100,000	(1)
C011-2 MTN		22-Sep-17		1997		6.500		55,454	(1)
C011-3 MTN		22-Sep-17		1997		6.500		125,000	(1)
C012-MTN		22-Sep-17		1997		6.500		50,000	(1)
C012-MTN		22-Sep-17		1997		6.500		50,000	(1)
L004-MTN		22-Sep-17		2000		6.500		25,000	(1)
C024-MTN		20-Aug-18		1998		6.705		20,000	(4)
C023-1 MTN		15-Nov-18		1998		5.500		75,000	(4)
C023-2 MTN		15-Nov-18		1998		5.500		25,000	(1)
L003 MTN		15-Nov-18		2000		5.500		75,000	(1)
C049 MTN		26-Jul-32		2002		4.310		50,000	(1)
C052 MTN		29-Oct-32		2002		5.975		30,000	(1)
C031 MTN		5-Mar-40		2000		6.200		176,000	(1)
C031-2 MTN		5-Mar-40		2001		6.200		50,000	(1)
C040-MTN		5-Mar-42		2002		6.000		100,000	(1)
C040-1 MTN		5-Mar-42		2002		6.000		200,000	(1)
C040-2 MTN		5-Mar-42		2002		6.000		50,000	(1)
								1,950,454
H006-MTN		1-Oct-03		2001		Floating		20,000	(5)
H001-MTN		30-Jun-05		2000		Floating		48,000	(1)
H010-MTN		30-Nov-06		2001		Step		40,000	(5)
H008-MTN		25-Jun-07		2001		Floating		15,000	(5)
H011-MTN		17-Jan-08		2002		Floating Step		106,000	(1)
H007-MTN		31-Jul-09		2001		Step		15,000	(5)
H012-MTN		31-Jan-13		2003		5.400		15,000	(5)
H009-MTN		30-Nov-13		2001		Step		30,000	(5)
C031-2 HEALTH		5-Mar-40		2001		6.200		50,000	(1)
								339,000
D005-MTN		15-Jul-03		1998		4.750		100,000	(1)
D005-MTN		15-Jul-03		1999		4.750		50,000	(1)
D028-MTN		13-Oct-03		2000		Floating		5,000	(1)
D014-MTN		15-Nov-04		1999		5.100		25,000	(1)
D066-MTN		17-Oct-05		2003		Floating		100,000	(1)
D030-MTN		12-Dec-06		2001		Floating		20,000	(1)
D030-1 MTN		12-Dec-06		2001		Floating		20,000	(1)
D018-MTN		15-Mar-07		1999		Floating		11,000	(1)
D055-MTN		15-Jul-07		2002		Step		25,000	(1)
D056-MTN		15-Sep-07		2002		Step		15,000	(1)
D057-MTN		15-Jul-12		2002		Step		10,000	(1)
D042-MTN		15-Dec-07		2001		Step		22,000	(5)
D041-MTN		15-Dec-08		2001		Step		15,000	(5)
D051-MTN		16-Dec-08		2002		Equity		15,000	(5)
D013-MTN		15-Nov-09		1999		5.100		25,000	(4)
D026-MTN		14-Apr-10		2000		Floating		15,000	(5)
D063-MTN		22-Nov-10		2002		5.060		15,000	(5)
D011-MTN		15-Mar-11		1999		5.750		20,000	(4)
D046-MTN		15-Mar-12		2001		Step		20,000	(5)
D047-MTN		15-Apr-12		2002		Step		10,000	(5)
D048-MTN		15-Apr-12		2002		5.610		15,000	(5)

49

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE — (continued)

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
D054-MTN		15-Jun-12		2002		5.870		15,000		(5)
D062-MTN		1-Dec-12		2002		Step		15,000		(5)
D044-MTN		15-Sep-13		2001		Step		25,000		(5)
D040-MTN		15-Dec-13		2001		Step		40,000		(5)
D045-MTN		15-Dec-13		2001		Step		15,000		(5)
D049-MTN		15-Mar-14		2002		Step		30,000		(5)
D050-MTN		15-Apr-14		2002		6.220		15,000		(5)
D067-MTN		1-Jun-14		2002		Step		15,000		(5)
D052-MTN		11-Jun-14		2002		Step		25,000		(5)
D058-MTN		1-Dec-14		2002		Step		30,000		(5)
D059-MTN		1-Dec-14		2002		5.800		35,000		(5)
D061-MTN		1-Dec-14		2002		5.670		30,000		(5)
D065-MTN		22-Feb-15		2002		Step		35,000		(5)
D068-MTN		15-Jan-15		2003		Step		30,000		(5)
D064-MTN		1-Apr-15		2002		5.970		15,000		(5)
D069-MTN		15-Apr-15		2003		5.640		15,000		(5)
D043-MTN		15-Jun-17		2001		Step		27,000		(5)
D053-MTN		15-Jan-18		2002		Step		18,000		(5)
D003-MTN		1-Jun-18		1998		6.400		28,668		(5)
D009-MTN		15-Jan-19		1999		5.760		17,000		(5)
D025-MTN		5-Mar-31		2000		6.300		100,000		(5)
D025-1-MTN		5-Mar-31		2000		6.300		150,000		(5)
D025-2-MTN		5-Mar-31		2000		6.300		60,000		(5)
								1,338,668
Canadian Issues Swapped to U.S. Dollars:
EN		22-Jun-05		2000		6.250		300,000		(1)
DE		22-Jul-13		1993		8.500		300,000		(1)
								(600,000	)
Foreign Issues Swapped to Canadian Dollars:
DC-FX Hedge		22-Apr-03		1993				155,792
DD-FX Hedge		27-May-03		1993				68,362
DB		14-Apr-03		1993				81,947
DB		14-Apr-03		1993				42,427
DB-FX Hedge		14-Apr-03		1993				45,005
U005		30-May-03		2001				232,200
H005		30-Sep-03		2001				62,000
DF		28-Nov-03		1993				36,600
DI		8-Mar-04		1994				86,226
DK		28-Jun-04		1994				79,519
DN		19-Jul-04		1994				64,904
U002		23-Feb-05		1995				35,277
DW		14-Jun-06		1996				65,164
EU		17-Jan-06		2002				300,000
EU		17-Jan-06		2002				246,650
EP-1		20-Nov-06		2002				250,000
C053		12-Dec-07		2002				11,046
ET		10-Jan-08		2003				172,550
ET		10-Jan-08		2003				37,050
D060		1-Dec-09		2002				15,800
EM		22-Feb-10		2000				66,500
EM		22-Feb-10		2000				75,000
AZ		17-Jul-16		1986				200,630

50

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE — (continued)

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
C036		21-Nov-16		2001				39,340
C037		21-Nov-16		2001				13,110
BM		15-Jan-18		1988				254,960
BU		1-Dec-18		1988				136,375
CB		15-Jan-20		1990				136,475
CD		1-Apr-20		1990				337,890
								3,348,799
Total Canadian Dollars:								13,103,439
(B) Payable in U.S. Dollars:
DH		19-Jan-04		1994		6.125		514,255	(1)
EU		17-Jan-06		2002		2.750		514,255	(1)
EP		20-Nov-06		2001		4.250		514,255	(1)
EP		20-Nov-06		2002		4.250		220,395	(1)
EP-1		20-Nov-06		2002		4.250		235,088	(1)
EF		1-Oct-08		1998		5.500		367,325	(1)(2)
EM		22-Feb-10		2000		7.500		73,465	(1)(2)
EM		22-Feb-10		2000		3.885		146,930	(1)(2)
EM		22-Feb-10		2000		3.892		220,395	(1)(2)
EM		22-Feb-10		2000		7.500		146,930	(1)(2)
EM		22-Feb-10		2000		7.500		146,930	(1)(2)
AZ		17-Jul-16		1986		7.750		219,499	(1)(2)
BM		15-Jan-18		1988		9.125		293,860	(1)(2)
EE		15-Sep-18		1988		9.500		293,860	(1)
BU		1-Dec-18		1988		9.625		440,790	(1)
CB		15-Jan-20		1990		8.800		367,325	(1)
CD		1-Apr-20		1990		9.250		440,790	(1)
CO		15-Sep-21		1991		8.875		440,790	(1)
								5,597,137
Medium-Term Notes Payable in U.S. Dollars:
U005		30-May-03		2001		Floating		220,395
H005		30-Sep-03		2001		Floating		58,772
U002		23-Feb-05		1995		7.470		36,733	(1)(2)
D060		1-Dec-09		2002		Step		14,693	(5)
C053		12-Dec-07		2002		Floating		10,285	(5)
								340,878
Foreign Issues swapped to Canadian Dollars:
U005		30-May-03		2001		Floating		220,395
H005		30-Sep-03		2001		Floating		58,772
U002		23-Feb-05		1995		7.470		36,733
EU		17-Jan-06		2002		2.750		514,255
EP-1		20-Nov-06		2002		4.250		235,088
C053		12-Dec-07		2002		Floating		10,285
EF		1-Oct-08		1998		5.500		73,465
D060		1-Dec-09		2002		Step		14,693
EM		22-Feb-10		2000		7.500		293,860
AZ		17-Jul-16		1986		7.750		219,499
BM		15-Jan-18		1988		9.125		293,860
BU		1-Dec-18		1988		9.625		146,930
CB		5-Jan-20		1990		8.800		146,930

51

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE — (continued)

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
CD		1-Apr-20		1990		9.250		367,324
								(2,632,089	)
Foreign Issues swapped to U.S. Dollars:
DB		14-Apr-03		1993				84,852
DB		14-Apr-03		1993				(42,426	)
DB-FX Hedge		14-Apr-03		1993				(42,426	)
C032		12-Oct-10		2000				68,984
DC		22-Apr-03		1993				144,927
DC-FX Hedge		22-Apr-03		1993				(144,927	)
DD		27-May-03		1993				79,342
DD-FX Hedge		27-May-03		1993				(64,649	)
DM		3-Aug-04		1994				70,894
EN		22-Jun-05		2000				296,799
EF		1-Oct-08		1998				68,314
ET		10-Jan-08		2003				197,619
ET		10-Jan-08		2003				(197,619	)
EM		22-Feb-10		2000				142,700
DE		22-Jul-13		1993				276,794
								939,178
Total U.S. Dollars:								4,245,104
(C) Payable in Swiss Francs:
DC		22-Apr-03		1993		5.250		162,825		(1)(3)
ET		10-Jan-08		2003		2.000		217,100		(1)(2)
								379,925
Swapped to U.S.Dollars:
DC		22-Apr-03		1993		5.250		162,825
ET		10-Jan-08		2003		2.000		217,100
								(379,925	)
Total Swiss Francs:								0
(D) Payable in Japanese Yen:
C032		12-Oct-10		2000		1.895		62,250		(1)(3)
DB		14-Apr-03		1993		4.920		168,075		(1)(2)(3)
DD		27-May-03		1993		5.100		74,700		(1)(3)
DF		28-Nov-03		1993		4.100		37,350		(1)(2)
DI		8-Mar-04		1994		4.030		87,150		(1)(2)
DK		28-Jun-04		1994		4.200		74,700		(1)(2)
DN		19-Jul-04		1994		4.700		62,250		(1)(2)
DM		3-Aug-04		1994		4.500		62,250		(1)(3)
DW		14-Jun-04		1996		3.450		62,250		(1)(2)
C036		21-Nov-16		2001		2.000		37,350		(1)(2)
C037		21-Nov-16		2001		2.030		12,450		(1)(2)
								740,775
Japanese Yen Issues swapped to Canadian Dollars:
DK		28-Jun-04		1994		4.200		74,700
DN		19-Jul-04		1994		4.700		62,250
DB		14-Apr-03		1993		4.920		84,038
DF		28-Nov-03		1993		4.100		37,350

52

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE — (continued)

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
DI		8-Mar-04		1994		4.030		87,150
DW		14-Jun-04		1996		3.460		62,250
C036		21-Nov-16		2001		2.000		37,350
C037		21-Nov-16		2001		2.030		12,450
								(457,538	)
Japanese Yen Issues swapped to U.S. Dollars:
DB		14-Apr-03		1993		4.920		84,037
C032		12-Oct-10		2000		1.900		62,250
DD		27-May-03		1993		5.100		74,700
DM		3-Aug-04		1994		4.500		62,250
								(283,237	)
Total Japanese Yen:								0
Builder Bonds Payable in Canadian Dollars:
Series 4		15-Jun-03		1998		Floating		12,717		(7)
Series 4		15-Jun-03		1998		Discount		14,623		(1)
Series 5		15-Jun-04		1999		Floating		7,454		(7)
Series 5		15-Jun-04		1999		Discount		30,377		(1)
Series 6		15-Jun-05		2000		Floating		14,908		(7)
Series 6		15-Jun-03		2000		Fixed		313,016		(1)
Series 6		15-Jun-05		2000		Discount		36,598		(1)
								429,693
Total Bonds and Debentures:								17,778,236

			Amount
	Interest Rate %		Outstanding		Ref
			($ thousands)
Canada Pension Plan Payable in Canadian Dollars:
April/03 — May 2019		8.21% - 17.51%		1,128,416		(9	)
Promissory Notes Payable in Canadian Dollars:				175,000
Treasury Bills Payable in Canadian Dollars:				325,000		(8	)
TOTAL BORROWINGS				19,406,652

53

VI. STATEMENT OF SECURITIES GUARANTEED BY THE PROVINCE

AS AT MARCH 31, 2003

			Year of		Interest
Series	Date of Maturity		Issued		Rate (%)	Amount Outstanding		Ref.
						(In thousands of dollars)
DEBT OF SELF-SUPPORTING UTILITIES:
The Manitoba Hydro-Electric Board
Savings Bonds: (Payable in Canadian Dollars)
1		15-Jun-92		1989	Matured		86
2		15-Jun-93		1990	Matured		25
3		15-Jun-96		1991	Matured		201
4		15-Jun-97		1992	Matured		568
5		15-Jun-01		1996	Matured		1,303
6		15-Jun-02		1997	Matured		500
6		15-Jun-00		1997	Matured		368
6		15-Jun-02		1997	Matured		508
7		15-Jun-06		2001	Floating		8,195	(7)
7		15-Jun-04		2001	5.500		10,583
7		15-Jun-04		2001	5.500		200,000
7		15-Jun-06		2001	6.000		70,138
Series 8:
5 yr floating		15-Jun-07		2002	Floating		30,405	(7)
3 yr fixed		15-Jun-05		2002	4.750		2,707
3 yr fixed		15-Jun-05		2002	4.031		100,000
5 yr fixed annual		15-Jun-07		2002	5.500		180,469
5 yr fixed compound		15-Jun-07		2002	5.500		81,238
Total Savings Bonds							687,294
Manitoba Hydro Promissory Notes							128,000
Winnipeg Hydro Bonds							155,829
Total Manitoba Hydro-Electric Board							971,123
Debt of Institutions on which the debt servicing costs including principal repayments are paid in whole or in part from the Consolidated Fund:
Grow Bonds							8,079	(6)
Total Self-Supporting Guaranteed Debt							979,202

References:

1.	Non-callable/ Redeemable
2.	All or part swapped into Canadian dollars.
3.	All or part swapped to U.S. dollars.
4.	Callable as per terms.
5.	Extendible as per terms.
6.	The Province has only guaranteed the principal portion of the issue.
7.	Redeemable at holder’s option on each June 15 and December 15 prior to maturity.
8.	91 day Treasury Bills issued to the public in the amount of $25,000,000 weekly.
9.	Held by and callable at par at the option of the Minister of Finance of Canada on 6 months notice, subject to the requirement of the Canada Pension Plan.

54

VII. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF OPERATIONS

			For the Year Ended March 31,
			1999			2000			2001			2002			2003
			(In thousands of dollars)
Revenues
	Electric
		Manitoba		$748,277			$737,230			$781,063			$786,036			$875,841
		Extraprovincial		326,200			376,570			479,673			587,893			463,430
	Other revenue			7,153			10,499			11,683			10,415			15,015
	Natural gas			—			268,707			503,423			479,346			514,847
				1,081,630			1,393,006			1,775,842			1,863,690			1,869,133
Expenses
	Operating and administrative			222,846			270,787			289,442			297,966			325,856
	Depreciation			197,969			227,165			249,425			259,774			281,348
	Water rentals			50,518			50,681			55,783			112,783			102,856
	Fuel and power purchased			58,813			33,221			48,164			71,423			151,169
	Capital and other taxes			38,543			57,612			59,530			61,361			65,510
	Cost of gas sold			—			182,043			384,038			364,882			392,273
				568,689			821,509			1,086,382			1,168,189			1,319,012
Net Income before Finance Expense				512,941			571,497			689,460			695,501			550,121
											��
Finance Expense
	Interest on debt			506,278			514,168			540,897			586,798			590,852
	Amortization of debt discount and expense			10,768			8,699			5,822			11,138			726
	Interest applied to construction			(19,704	)		(17,279	)		(17,765	)		(25,212	)		(27,238	)
	Investment income			(84,505	)		(85,938	)		(108,486	)		(91,029	)		(85,510	)
				412,837			419,650			420,468			481,695			478,830
	Net Income			$100,104			$151,847			$268,992			$213,806			$71,291

55

VIII. MANITOBA HYDRO

CONSOLIDATED BALANCE SHEET

		As at March 31,
		2002		2003
		(In thousands of dollars)
ASSETS
Capital Assets
	In service		$9,071,708		$9,991,316
	Less accumulated depreciation		2,834,344		3,042,205
			6,237,364		6,949,111
	Construction in progress		388,353		356,095
			6,625,717		7,305,206
Current Assets
	Bank balances and temporary investments		13,656		29,694
	Accounts receivable and accrued revenue		386,656		393,166
	Interest receivable		24,751		9,474
	Materials and supplies, at average cost		83,024		69,420
			508,087		501,754
Other Assets
	Pension assets		472,713		457,310
	Deferred debt costs		902,887		570,792
	Other deferred expenses and receivables		379,332		451,415
	Sinking fund investments		1,514,514		947,915
			3,269,446		2,427,433
			$10,403,250		$10,234,393
LIABILITIES AND RETAINED EARNINGS
Long-term debt net of sinking fund			$5,609,238		$5,976,975
Sinking fund shown as an asset			1,514,514		947,915
			7,123,752		6,924,890
Current Liabilities
	Accounts payable and accrued liabilities		209,630		260,028
	Notes payable		180,000		128,000
	Accrued Interest		99,670		110,829
	Current portion of long-term debt		537,323		342,849
			1,026,623		841,706
Other Liabilities
	Deferred liabilities and credits		249,462		301,752
	Asset purchase obligation		—		255,004
	Pension obligation		422,430		478,578
			671,892		1,035,334
Contributions in aid of construction			280,430		264,085
Retained earnings			1,300,553		1,168,378
			$10,403,250		$10,234,393

56

IX. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION

FOR THE YEAR ENDED MARCH 31,

		2002			2003
		(In thousands of dollars)
Cash Provided From (Used For) Operations
	Cash receipts from customers		$1,934,904			$1,863,534
	Cash paid to suppliers and employees		(914,335	)		(983,658	)
	Interest paid		(555,655	)		(550,280	)
	Interest received		89,482			102,349
			553,964			431,945
Cash Provided From (Used For) Financing
	Proceeds from long-term debt		1,247,740			825,386
	Retirement of long-term debt		(1,095,800	)		(977,422	)
	Sinking fund withdrawal		—			643,900
	Distribution to Province of Manitoba		—			(200,000	)
	Mitigation liability		(18,722	)		(26,087	)
	Notes payable		(31,455	)		(53,686	)
	Other		(1,064	)		786
			100,699			212,877
Cash Used For Investment
	Additions to capital assets net of contributions		(439,248	)		(484,453	)
	Sinking fund payment		(127,365	)		(133,795	)
	Net Obligation to the City of Winnipeg		—			(23,474	)
	Other		(72,145	)		12,938
			(638,758	)		(628,784	)
Increase in Cash			15,905			16,038
Cash (Deficiency) at Beginning of Year			(2,249	)		13,656
Cash at End of Year			$13,656			$29,694

57