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

Exhibit 99.1

     The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report on Form 18-K for the fiscal year ended March 31, 2004, as set forth in the pages attached hereto:

Exhibit 99.1	Revised Description of the Province, replacing the Description filed on November 1, 2004 on Form 18-K for the fiscal year ended March 31, 2004:
	The revised Description reflects revisions to General Government Program Debt in the March 31, 2004 financial information as a result of a reduction in Provincial Sinking Funds of approximately $231 million in accordance a change in the Province’s accounting treatment of debentures issued by certain school boards and hospitals which are held by the Provincial Sinking Fund, the debt service of which is paid with Grants from the Government, as described in footnote (5) on Page 29. The effect of the amendment in the Description of the Province on selected tables for the fiscal year ended March 31, 2004 are as follows:
	Page 3 (Table — Net Direct Funded and Guaranteed Debt)
	—	Debt issued for General Government Programs increased from $6,636 to $6,867 million
	—	Net Direct Funded and Guaranteed Debt increased from $15,448 to $15,679 million.
	—	General Government Program Debt as a Percentage of Nominal Gross Domestic Product increased from 17.2% to 17.8%.
	Page 28 (Table — Direct Funded Debt of the Province)
	—	Total Direct Funded Debt increased from $19,517,044 to $19,517,438.
	—	Sinking Funds decreased from $4,961,105 to $4,730,421.
	—	Net Direct Funded Debt increased from $14,555,939 to $14,787,017.
	Page 31 (Table — Maturity Schedule-Direct and Guaranteed Debt)
	—	Sinking Fund Withdrawals decreased from $4,991 to $4,760 million
	—	Net Maturities increased from $15,448 to $15,679
	Page 32 (Table — Consolidated Funded Debt of the Manitoba Public Sector)
	—	Sinking Funds held for General Government Programs Debt decreased from $3,419 to $3,188.
	—	Net General Government Programs Debt increased from $6,636 to $6,867 million.
	—	Net Public Sector Debt increased from $16,545 to $16,776 million.
	Page 33 (Table — Public Sector Debt Information)
	The Public Sector Debt information for 2004 has been amended to reflect the increase in Provincial Debt of $231 million.

PROVINCE OF MANITOBA

          This description of Province of Manitoba is dated as of November 1, 2004 and appears as Exhibit 99.1 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, 2004.

      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			5
Province of Manitoba			6
	General Information		6
	Constitutional Framework		6
	Provincial Government		6
Economy			7
	General		7
	Economic Structure		8
	Merchandise Exports		14
	Capital Investment		15
	Labor Force		16
	Energy		17
Government Finances			18
	Budget		20
	Operating Fund Revenue		22
	Operating Fund Expenditure		24
Crown Organizations and Government Enterprises			26
Public Debt			28
	Debt Record		28
	Direct Funded Debt of the Province		28
	Guaranteed Debt of the Province		30
	Maturity Schedule		31
	Sinking Funds		31
	Unfunded Debt		31
	Consolidated Funded Debt of the Manitoba Public Sector		32
	Selected Debt Information		33
	Pension Liability		33
The Manitoba Hydro-Electric Board			34
	Operations		35
	Rate Matters		36
Statistical Information			37
	Construction Program		38
	Export Power Sales		40
Canadian Foreign Exchange			42
Tables of Supplementary Information			43

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, 2004. Additional information with respect to Manitoba is available in that Annual Report, in the other exhibits to that Annual Report and in amendments thereto. The 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 those 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 29, 2004, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.2207.

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

2

SUMMARY

The following information is qualified in its entirety by the more

detailed information in this document.

PROVINCE OF MANITOBA

Economy

																	Compound
		Year Ended December 31,															Annual
																	Growth Rate
		1999			2000			2001			2002			2003			1999-2003
		(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product			$31,925			$34,085			$35,219			$36,997			$38,491			4.8	%
Change in Real Gross Domestic Product Manitoba			1.6	%		4.5	%		1.3	%		2.3	%		1.9	%		—
	Canada		5.5			5.2			1.8			3.4			2.0			—
Manufacturing Shipments			$10,918			$11,439			$11,372			$11,263			$11,413			1.1
Farm Cash Receipts			2,908			3,151			3,697			3,855			3,546			5.1
Capital Investment			5,186			5,198			5,591			5,963			6,005			3.7
Personal Income			26,849			28,395			29,374			30,175			31,066			3.7
Population at July 1 (in thousands)			1,143			1,147			1,151			1,156			1,162			0.4
Average Unemployment Rate			5.6	%		4.9	%		5.0	%		5.2	%		5.0	%		—
Change in Consumer Price Index (Manitoba)			1.9			2.5			2.6			1.6			1.8			—
Average Exchange Rate (C$ per U.S.$)			1.4858			1.4852			1.5484			1.5704			1.4015			—

Revenue and Expenses of the Government Reporting Entity

		Year Ended March 31,
		2000			2001		2002			2003			2004
		($ millions)
Total Revenue			7,202			7,610		7,603			7,919			8,375
Total Expenses			7,287			7,496		7,726			7,995			8,559
Net Income (Loss)			(85	)		114		(123	)		(76	)		(184	)
	Adjustment to estimate for Federal accounting error		—			—		—			51			—
	Increase (decrease) in equity in Government Enterprises		217			317		113			(159	)		(420	)
Summary Net Income(Loss)			132			431		(10	)		(184	)		(604	)

Net Direct Funded and Guaranteed Debt

		As of March 31,
		2000			2001			2002			2003			2004
		(In millions of dollars)
Consisting of
	Net Direct Funded Debt		$13,218			$13,765			$13,833			$13,601			$14,787
	Net Provincial Guaranteed Debt		241			391			570			953			892
			$13,459			$14,156			$14,403			$14,554			$15,679
Issued for
	General Government Programs		$6,718			$6,798			$6,651			$6,650			$6,867
	Self-Sustaining Purposes		6,741			7,358	(1)		7,752	(1)		7,904	(1)		8,335	(1)
	Loans Payable to the Government of Canada and Government Enterprises (2)		—			—			—			—			477
			$13,459			$14,156			$14,403			$14,554			$15,679
General Government Programs Debt as a Percentage of Nominal Gross Domestic Product			21.0	%		19.9	%		18.9	%		18.0	%		17.8	%

3

     (1) 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.

     (2) Canadian generally accepted accounting principles (GAAP) requires certain amounts owing to the Federal Government and Government Enterprises be recorded as loans payable. These amounts were first recorded in the 2003/04 Fiscal Year, see “Direct Funded Debt of the Province (note 5).”

4

Map of the Province of Manitoba

5

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, 2004 was 1,170,300, of whom approximately 703,500 lived in the Winnipeg Census Metropolitan Area. Winnipeg, the capital of the Province, 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

6

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; finance, insurance and real estate; transportation and storage; wholesale trade; retail trade; agriculture; information and culture; and construction. The largest components of manufacturing are food processing, transportation equipment, chemicals, machinery, wood, fabricated metals, plastics, furniture 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 2003 for key economic indicators and selected sectors of the economy for Manitoba and Canada, as well as the unemployment rate for 2003.

	Manitoba			Canada
Single-Detached Housing Starts		4.9	%		-1.7	%
Retail Sales		3.6			3.8
Manufacturing Shipments		1.3			-0.8
Gross Domestic Product		4.0			5.3
Real Gross Domestic Product		1.9			2.0
Capital Investment		0.7			3.8
Foreign Merchandise Exports		-2.6			-3.1
Farm Cash Receipts		-8.0			-5.8
Value of Mineral Production		2.8			1.5
Consumer Price Index		1.8			2.8
Employment		0.3			2.2
Average Unemployment Rate		5.0			7.6

      Year-to-date data for 2004 indicate that foreign exports, single detached housing starts, retail sales, manufacturing shipments, foreign merchandise exports, farm cash receipts and employment are increasing. According to the February 2004 Statistics Canada survey of investment intentions, capital investment is expected to increase by 5.4% to $6.3 billion, as public investment increases 14.4% while private investment increases 2.2%.

7

      The following table sets forth selected indicators of economic activity and the compound annual growth rates for Manitoba and Canada for the years 1999 through 2003. 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
			1999			2000			2001			2002			2003			1999-2003
			(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product (1)
	Manitoba			$31,925			$34,085			$35,219			$36,997			$38,491			4.8	%
	Canada			982,441			1,076,577			1,108,200			1,157,968			1,218,772			5.5
Real Gross Domestic Product
	Manitoba (2)			$31,442			$32,866			$33,277			$34,031			$34,676			2.5
		Change		1.6	%		4.5	%		1.3	%		2.3	%		1.9	%		—
	Canada (2)			$969,750			$1,020,488			$1,038,845			$1,074,621			$1,096,359			3.1
		Change		5.5	%		5.2	%		1.8	%		3.4	%		2.0	%		—
Personal Income				$26,849			$28,395			$29,374			$30,175			$31,066			3.7
Personal Income Per Capita (in Dollars)				23,490			24,756			25,520			26,103			26,735			3.3
Retail Sales				8,910			9,310			9,850			10,541			10,925			5.2
Capital Investment				5,186			5,198			5,591			5,963			6,005			3.7
Single-Detached Housing Starts (Units)				2,231			2,348			2,460			3,016			3,165			9.1
Change in Consumer Price Index
	Manitoba			1.9	%		2.5	%		2.6	%		1.6	%		1.8	%		—
	Canada			1.7			2.7			2.6			2.2			2.8			—
Population (July 1) (in thousands)
	Manitoba			1,143			1,147			1,151			1,156			1,162			0.4
	Canada			30,404			30,689			31,021			31,373			31,661			1.0
Employment (in thousands)				542.7			554.4			557.9			567.0			568.7			1.2
Average Unemployment Rate				5.6	%		4.9	%		5.0	%		5.2	%		5.0	%		—
Average exchange rate (C$ per U.S.$)				1.4858			1.4852			1.5484			1.5704			1.4015			—

     (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 2003, goods producing industries accounted for 26.7% of real gross domestic product at basic prices. Manufacturing accounted for 12.7% of real gross domestic product at basic prices, agriculture for 4.7% and construction for 4.5%. The commercial service sector accounted for 53.6% of real gross domestic product at basic prices, and the non-commercial service sector for 19.6%.

8

      The following table sets forth the Real Gross Domestic Product by industry at basic prices and the compound annual growth rates for the years 1999 through 2003.

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

													Compound
													Annual
			Year Ended December 31,										Growth
													Rate
			1999		2000		2001		2002		2003		1999-2003
			(In millions of 1997 dollars)
Goods Producing Industries
	Manufacturing			$3,603		$3,903		$3,919		$3,992		$4,084		3.2	%
	Agriculture			1,450		1,604		1,375		1,425		1,491		0.7
	Construction			1,290		1,171		1,405		1,347		1,444		2.9
	Utilities			974		1,015		1,023		977		861		-3.0
	Mining			544		662		665		606		580		1.6
	Forestry, Fishing and Trapping			92		99		100		102		104		3.1
Total Goods Producing Industries				7,953		8,454		8,487		8,449		8,564		1.9
Service Producing Industries
	Commercial Services
		Finance, Insurance and Real Estate		2,936		3,200		3,336		3,472		3,570		5.0
		Owner-Occupied Dwellings (2)		2,691		2,750		2,799		2,872		2,981		2.6
		Transportation and Storage		2,066		2,134		2,085		2,096		2,111		0.5
		Wholesale Trade		1,843		1,894		1,905		2,047		2,077		3.0
		Retail Trade		1,688		1,779		1,848		1,945		1,979		4.1
		Information and Culture		1,190		1,302		1,364		1,448		1,490		5.8
		Professional and Scientific		813		774		771		764		775		-1.2
		Accommodation, Food and Beverage		659		803		786		780		771		4.0
		Business Services		483		441		477		509		521		1.9
		Other Services		781		839		873		899		912		4.0
	Total Commercial Services Industries			15,150		15,916		16,244		16,832		17,187		3.2
	Non-commercial Services
		Health and Welfare		2,167		2,179		2,169		2,248		2,304		1.5
		Education		1,544		1,554		1,558		1,584		1,608		1.0
		Federal Administration		932		973		971		986		995		1.6
		Provincial Administration		725		775		790		788		801		2.5
		Municipal Administration		521		540		550		576		586		3.0
	Total Non-commercial Services Industries			5,889		6,021		6,038		6,182		6,294		1.7
Total Service Producing Industries				21,039		21,937		22,282		23,014		23,481		2.8
Real Gross Domestic Product at Basic Prices				$28,992		$30,391		$30,769		$31,463		$32,045		2.5

     (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) 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 50.6% of the value of total shipments in 2003.

      The largest industry, food, accounts for 21.5% of total shipments, and produces a broad range of products. The next largest industries are: transportation equipment, primarily buses and aerospace equipment (14.9% of shipments); chemicals, primarily farm chemicals and

9

pharmaceuticals (7.1% of shipments); and machinery, mainly agricultural implements (7.0% of shipments). The remaining industries range in size from 6.1% to 1.5% of shipments.

      In 2003, manufacturing shipments increased 1.3% due to increased production in the chemicals, fabricated metals, plastics and wood 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 1999 through 2003.

GROSS VALUE OF MANUFACTURING SHIPMENTS

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1999		2000		2001		2002		2003		1999-2003
		(In millions of dollars)
Non-durables Food			$2,437.7		$2,492.6		$2,442.7		$2,431.9		$2,456.8		0.2	%
	Chemicals		516.3		544.5		635.9		635.0		814.4		12.1
	Plastics		461.2		467.8		511.9		537.7		568.4		5.4
	Printing		483.0		513.1		547.2		515.6		509.7		1.4
	Clothing		380.1		376.6		293.3		277.4		263.6		-8.7
	Beverages		194.7		220.3		211.9		209.6		208.0		1.7
	Other Non-durables		616.1		746.4		716.8		679.1		584.0		-1.3
Durables Transportation Equipment			1,807.8		1,729.3		1,789.8		1,638.7		1,697.0		-1.6
	Machinery		827.6		809.1		788.5		880.4		801.5		-0.8
	Wood Products		552.2		588.5		623.0		667.4		697.3		6.0
	Fabricated Metals		559.4		605.3		582.0		585.2		620.3		2.6
	Furniture		505.7		510.0		498.9		549.3		543.8		1.8
	Electrical and Electronics		189.9		259.8		233.1		212.6		165.9		-3.3
	Other Durables		1,386.6		1,575.6		1,497.2		1,443.2		1,482.0		1.7
Total			$10,918.3		$11,438.9		$11,372.1		$11,263.0		$11,412.6		1.1

Source: Statistics Canada.

     In the first eight months of 2004, the value of manufacturing shipments increased 10.7% compared to the first eight months of 2003. The increase is principally due to a 27.1% increase in wood products, a 19.5% increase in food processing, a 15.0% increase in fabricated metals, a 12.6% increase in machinery and a 9.1% increase in clothing. Overall, ten 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 2003, farm cash receipts decreased 8.0%. Crop receipts decreased 12.1% due to lower receipts from wheat and other grains reflecting lower prices. Livestock receipts decreased 9.7% as a result of a decline of 38.5% in cattle and calves receipts while hog receipts increased 4.9%. Most other types of livestock receipts increased. Direct payments increased 40.8%.

10

      The following table sets forth farm cash receipts and the compound annual growth rates for the years 1999 through 2003.

FARM CASH RECEIPTS

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1999		2000		2001		2002		2003		1999-2003
		(In millions of dollars)
Crops
	Oilseeds		$394.4		$371.4		$416.1		$587.7		$623.6		12.1	%
	Wheat		493.9		447.3		586.3		658.4		451.7		-2.2
	Specialty and Forage		146.8		172.7		154.5		210.5		224.9		11.3
	Vegetables		177.0		176.9		202.0		203.1		204.5		3.7
	Other Grains		107.1		117.8		193.5		212.2		156.3		9.9
	Other (1)		82.0		26.4		-33.0		43.3		22.6		-27.5
Total Crops			1,401.2		1,312.5		1,519.4		1,915.1		1,683.7		4.7
Livestock
	Hogs		458.8		669.7		805.7		719.0		754.4		13.2
	Cattle and Calves		455.2		484.2		569.5		560.4		344.7		-6.7
	Dairy		152.3		154.0		158.0		163.9		174.4		3.4
	Poultry and Eggs		125.3		141.8		149.5		149.8		153.7		5.2
	Other Livestock		99.3		101.1		113.0		128.1		126.8		6.3
Total Livestock			1,290.8		1,550.9		1,795.7		1,721.2		1,554.0		4.7
Direct Payments			216.0		287.1		382.1		219.0		308.3		9.3
Total			$2,908.0		$3,150.5		$3,697.2		$3,855.3		$3,545.9		5.1
Net Cash Income (2)			$531.7		$587.1		$906.8		$926.2		$452.3		-4.0

     (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. In 2003, Direct Payments to Manitoba agriculture producers increased mainly due to $62.6 million in income support payments provided to crop and livestock producers under the new Federal Transition Funding program, and $32.5 million of financial assistance to cattle producers affected by the ban on Canadian live cattle exports to the United States.

      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

11

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

      On December 23, 2003, a case of BSE was discovered in Washington State. On January 9, 2004, DNA testing indicated that the BSE-infected animal had been born in Alberta. As well, the Washington State BSE case caused other countries, such as South Korea and Japan, to extend the ban on imports of beef products to the United States as well.

      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 and other ruminant products into the United States.

      On March 5, 2004, the National Pork Producers Council in the United States, along with state pork producer organizations, filed anti-dumping and countervailing duty petitions with the United States government against Canadian swine exporters. On October 15, 2004, the U.S. Department of Commerce announced that, as a result of their investigations, a preliminary duty of 14.06% will be applied to live swine exports from Canada. Manitoba accounts for approximately half of Canada’s live swine exports to the United States, and, in 2003 exported live swine valued at approximately $279 million to that country. The International Trade Commission is expected to make a final determination on injury to the U.S. industry resulting from alleged “dumping” in April 2005. The duties on live swine will have a negative effect on Manitoba exports of live swine to the United States, although the exact impact is unclear at this time as the duty may not be permanent and the exact duty ultimately required is unknown.

      In the first six months of 2004, farm cash receipts increased 9.2% from the same period in 2004. Crop cash receipts increased 17.3%, primarily due to higher production volumes and prices, with the increases occurring across all the major crop categories except specialty and forage. Livestock cash receipts decreased 9.6% with cattle and calves decreasing 59.2%. Hog receipts increased 13.0%. Direct Payments increased $88.4 million or 92.9%.

      In 2004, crop production volumes are expected to be below 2003 levels, which should lead to lower production values as cool wet conditions during the growing and harvesting season affected large parts of the North American plains. 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 2003, the total value of mineral production in Manitoba increased 2.8% to $1,029 million. The value of metal production increased 2.0% in 2003 as a result of higher production volumes and higher price for nickel. Nickel accounted for 48% of the total value of mineral production in 2003. The value of zinc and copper production declined as a result of lower production volumes and lower prices. The value of petroleum production increased 4.9%, reflecting higher prices, while the value of industrial mineral production increased 6.2%.

12

      The following table sets forth the gross value of mineral production and the compound annual growth rates for the years 1999 through 2003.

GROSS VALUE OF MINERAL PRODUCTION

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1999		2000		2001		2002		2003		1999-2003
		(In millions of dollars)
Metals
	Nickel		$277.1		$561.6		$412.2		$403.4		$493.0		15.5	%
	Zinc		139.0		133.8		129.3		118.3		96.7		-8.7
	Copper		122.4		129.9		97.1		96.0		70.3		-12.9
	Gold		111.4		95.0		86.3		85.6		64.5		-12.8
	Other Metals		78.0		68.9		66.5		50.7		44.3		-13.2
Total Metals			727.9		989.3		791.5		754.0		768.7		1.4
Petroleum			95.1		163.9		135.0		150.1		157.4		13.4
Industrial Minerals			82.7		79.5		93.6		96.5		102.5		5.5
Total			$905.7		$1,232.7		$1,020.1		$1,000.5		$1,028.6		3.2

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

     Overall mining values are expected to increase in 2004. Higher prices for metals, especially nickel, zinc and copper, combined with production volumes near 2003 levels will increase the overall value of production in the province.

      The Bissett gold mine, which discontinued production in September 2001, is planned to resume mining in the summer of 2005. The New Britannia gold mine in Snow Lake, which had been scheduled to close in November 2004, is now expected to remain open for the next three years due to the discovery of significantly higher grade ore deposits adjacent to known deposits.

      Services. The service sector comprises a wide range of activities including transportation, finance, trade, tourism and personal services. From 1999 through 2003, commercial service industries accounted for 48.9% of average total employment in Manitoba, and non-commercial (primarily publicly funded) services accounted for 25.7%.

      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 2003, retail sales in Manitoba increased 3.6% to $10.9 billion. In the first eight months of 2004, retail sales increased 7.5% compared to the same period of 2003.

13

      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 2003, estimated tourism expenditures by both residents of Manitoba and visitors were $1,390 million, a decrease of 0.9% from 2002.

Merchandise Exports

      In 2003, total merchandise exports amounted to $23.1 billion, an increase of 3.0% from 2002, and were equal to 62.6% of GDP at market prices. Foreign countries accounted for 49.0% of merchandise exports and other Canadian provinces and territories accounted for the balance. In 2003, of the total foreign merchandise exports, 76.3% were to the United States, 12.3% to Asia, 5.0% to Europe and 2.2% to Mexico.

      Over the five years 1999 to 2003, exports to the United States increased by 7.6% (representing a compound annual growth rate of 1.8%) and exports to all other countries increased by 40.8% (representing a compound annual growth rate of 8.9%).

      The following table sets forth foreign exports by commodity and the compound annual growth rates for the years 1999 through 2003.

FOREIGN EXPORTS BY COMMODITY (1)

												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1999		2000		2001		2002		2003		1999-2003
		(In millions of dollars)
Manufacturing
	Food		$834.2		$830.1		$996.0		$1,058.6		$1,052.2		6.0	%
	Transportation Equipment		1,229.6		1,053.0		1,139.7		944.9		878.4		-8.1
	Primary Metals		608.1		745.8		803.5		847.1		870.2		9.4
	Machinery		503.9		584.8		535.9		679.8		620.8		5.4
	Wood Products		505.6		540.6		531.4		573.3		553.0		2.3
	Chemicals		333.6		359.2		418.1		398.1		459.7		8.3
	Paper and Allied		240.9		268.6		254.9		267.1		298.6		5.5
	Plastics		170.0		178.5		210.5		221.4		229.1		7.7
	Electrical and Electronic		235.7		274.7		273.8		188.2		187.9		-5.5
	Printing and Publishing		101.4		124.8		165.6		195.2		182.7		15.9
	Furniture and Fixtures		128.0		158.2		171.5		166.8		125.2		-0.6
	Clothing and Textiles		157.7		193.2		156.6		145.2		122.4		-6.1
	Fabricated Metals		72.0		95.1		126.1		119.2		116.2		12.7
	Other		227.0		340.2		245.8		299.9		328.9		9.7
Total Manufacturing			5,347.6		5,746.8		6,029.3		6,104.8		6,025.1		3.0
Agriculture
	Oilseeds		499.0		391.4		451.0		410.0		694.7		8.6
	Wheat		458.9		511.0		690.4		582.6		621.8		7.9
	Hogs		165.3		207.6		247.5		246.0		276.4		13.7
	Other Grains		115.9		135.7		179.7		136.0		176.2		11.0
	Vegetables		124.5		125.7		166.4		152.5		161.6		6.7
	Cattle		176.8		188.3		257.7		273.2		106.7		-11.9
	Other Agriculture		34.5		34.5		37.3		38.6		33.4		-0.8
Total Agriculture			1,575.0		1,594.1		2,030.0		1,839.0		2,070.7		7.1

14

											Compound
											Annual
	Year Ended December 31,										Growth
											Rate
	1999		2000		2001		2002		2003		1999-2003
	(In millions of dollars)
Electricity		343.0		442.7		534.7		390.5		263.7		-6.4
Other Primary		45.6		43.8		50.4		35.8		31.4		-8.9
Oil Trans Shipment		504.9		596.0		664.1		756.5		488.6		-0.8
Other		222.9		255.4		267.8		279.5		279.6		5.8
Total		$8,039.1		$8,678.8		$9,576.2		$9,406.2		$9,159.3		3.3

     (1) Most export data, except for some principal grains, are based on port-of-exit information; consequently, data for several categories do not reflect the true value of provincial foreign exports. The above data for 2003 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 $344.7 million. This does not include an estimated $49.7 million of nickel, which was exported through Ontario in that year.

Source: Statistics Canada.

     Total foreign exports for the first eight months of 2004 were up 12.4% compared to the first eight months of 2003. On a year-to-date basis, exports to the United States have increased by 3.9% while exports to other countries have increased by 44.8%.

Capital Investment

      In 2003, capital investment increased 0.7%. The largest percentage increases in capital investment occurred in retail trade, health care and social services, other capital and public administration. The largest decreases in capital investment occurred in information and cultural industries, agriculture, and education. The Statistics Canada survey of investment intentions published in February 2004 indicates that capital investment in 2004 is expected to increase by 5.4%. Private capital investment is expected to increase 2.2% and public investment to increase 14.4%. The largest increases are expected to occur in information and cultural industries, other capital, utilities, and education. The largest decreases are expected to occur in mining and manufacturing.

15

      The following table sets forth categories of capital investment and the compound annual growth rates for the years 1999 through 2003.

CAPITAL INVESTMENT

											Compound
											Annual
	Year Ended December 31,										Growth
											Rate
	1999		2000		2001		2002		2003		1999-2003
	(In millions of dollars)
Housing		$853.8		$911.5		$1,012.8		$1,195.4		$1,303.0		11.1	%
Public Administration		567.2		507.2		565.9		584.1		694.5		5.2
Utilities		418.0		396.1		515.0		491.8		524.9		5.9
Manufacturing		551.4		633.1		557.0		539.0		474.7		-3.7
Transportation and Storage		659.2		375.1		421.5		416.2		456.6		-8.8
Finance and Insurance		312.4		360.3		359.9		419.4		381.1		5.1
Real Estate		229.2		232.1		211.3		313.1		307.2		7.6
Agriculture		260.8		282.9		302.8		384.1		275.6		1.4
Minerals		128.9		236.3		249.6		264.6		241.1		16.9
Retail Trade		152.8		232.1		199.1		167.3		232.4		11.1
Information and Cultural		217.8		235.7		343.9		335.2		210.3		-0.9
Health Care and Social Services		183.1		203.1		157.3		151.2		186.1		0.4
Wholesale Trade		190.2		137.7		140.1		159.4		162.2		-3.9
Construction		110.2		101.9		136.4		142.3		151.3		8.2
Education		112.2		117.6		151.1		145.7		109.8		-0.5
Professional and Scientific		63.7		111.6		90.8		75.5		81.0		6.2
Other		174.9		123.6		176.6		178.5		212.8		5.0
Total		$5,185.8		$5,197.9		$5,591.1		$5,962.8		$6,004.6		3.7
Private		$3,807.1		$3,908.5		$4,232.7		$4,593.1		$4,441.6		3.9
Public		1,378.8		1,289.4		1,358.4		1,369.7		1,562.9		3.2

Source: Statistics Canada.

Labor Force

      In 2003, employment increased by 0.3% with growth occurring in utilities; accommodation and other services; construction; professional and administrative services; education and health services; and manufacturing. Declines were recorded in forestry, fishing and mining; information, culture and recreation; wholesale and retail trade; public administration; agriculture; transportation and storage; and finance, insurance and real estate. In 2003, the average unemployment rate in Manitoba was 5.0%, the lowest of any province in Canada and significantly lower than Canada’s rate of 7.6%.

16

      The following table sets forth selected labor force statistics for Manitoba and Canada for the years 1999 through 2003.

LABOR FORCE

	Annual Averages
	1999		2000		2001		2002		2003
	(In thousands unless otherwise indicated)
Labor Force		574.8		583.2		587.1		598.0		598.6
Employment		542.7		554.4		557.9		567.0		568.7
Participation Rate (%)		67.5		67.9		68.1		69.2		69.0
Participation Rate (Canada) (%)		65.6		65.9		66.0		66.9		67.5
Unemployment Rate (%)		5.6		4.9		5.0		5.2		5.0
Unemployment Rate (Canada) (%)		7.6		6.8		7.2		7.7		7.6

Source: Statistics Canada.

     In the first nine months of 2004, seasonally adjusted employment in Manitoba increased 0.9% compared to the same period for 2003, reaching 573,800. Employment increases were recorded in forestry, fishing and mining; public administration; information, culture and recreation; finance, insurance and real estate; education and health services; professional and administrative; construction; manufacturing; utilities; and wholesale and retail trade. Declines were recorded in accommodation and other services; transportation and storage; and agriculture.

      In the first nine months of 2004, the seasonally adjusted unemployment rate in Manitoba averaged 5.4%, up from 4.9% in the same period in 2003. In the first nine months of 2004, the seasonally adjusted unemployment rate in Canada averaged 7.3%. Manitoba’s seasonally adjusted labor force participation rate over the first nine months of 2004 averaged 69.2%, up from 69.0% in the same period of 2003.

Energy

      Refined petroleum and natural gas provided 36.4% and 35.1%, respectively, of the Province’s total energy needs in 2002, while 26.2% 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.”

17

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 Summary Financial Statements of the Government of the Province of Manitoba (See “Tables of Supplementary Information — Tables I and II”) 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 Revenue and Expense. 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.

18

      The Consolidated Fund of the Province reflects 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, such as the Fiscal Stabilization Fund and the Debt Retirement Fund, on a combined basis. The Legislative Assembly’s budgeting process is based on the Operating Fund, and compliance with the Province’s balanced budget legislation is measured by reference to the Operating Fund.

      The revenues and expenses of the Provincial Government are recorded in the Summary Financial Statements 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.

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.

      The Summary Financial Statements 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 Province as an expense.

      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.

19

STATEMENT OF REVENUE AND EXPENSE

OF THE GOVERNMENT REPORTING ENTITY

			Year Ended March 31,
			2000			2001		2002			2003			2004
			(In millions of dollars)
Revenue
	Manitoba Collections:
		Retail sales tax		918			933		966			1,007			1,064
		Fuel taxes		218			224		223			231			233
		Levy for health and education		225			239		244			257			268
		Mining Tax		7			45		9			18			22
		Other taxes		363			376		401			461			480
		Fees and other revenue		902			907		1,034			1,109			1,174
	Government Enterprise Transfers:
		Liquor Control Commission		156			158		163			166			174
		Manitoba Hydro		—			—		—			203			—
		Manitoba Lotteries Corporation		225			239		248			266			235
	Income taxes:
		Corporation income tax		307			444		306			160			289
		Individual income tax		1,611			1,757		1,659			1,636			1,720
	Federal transfers:
		Equalization		1,271			1,339		1,399			1,338			1,414
		Canada Health and Social Transfer		509			545		685			756			917
		Federal Health Supplement		131			92		—			—			—
		Medical Equipment Fund		—					3			16			21
		Health Reform Fund		—			—		—			—			37
		Primary Health Care Transition Fund		—			—		—			1			7
		Shared cost and other		359			312		263			294			320
Total Revenue				7,202			7,610		7,603			7,919			8,375
Expenses
	Health			2,354			2,616		2,740			2,955			3,301
	Education			1,806			1,915		1,998			2,059			2,169
	Family Services and Housing			819			854		893			930			965
	Community, Economic and Resource Development			1,190			942		908			960			1,042
	Justice and Other Government			639			655		685			724			753
	Debt Servicing			479			514		502			367			329
Total Expenses				7,287			7,496		7,726			7,995			8,559
Net Revenue (Expenses) Before Extraordinary Item				(85	)		114		(123	)		(76	)		(184	)
Adjustment to estimate for Federal accounting error				—			—		—			51			—
Net Revenue (Expenses)				(85	)		114		(123	)		(25	)		(184	)
Increase (decrease) in equity in Government Enterprises				217			317		113			(159	)		(420	)
Summary Net Income (Loss)				132			431		(10	)		(184	)		(604	)

Budget

      The Provincial Government prepares a budget for each fiscal year, which estimates revenue and expenses for the Operating Fund. The Fiscal Stabilization Fund serves 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, 2004, the Fiscal Stabilization Fund had $79 million in liquid assets.

      The Balanced Budget, Debt Repayment and Taxpayer Accountability Act (the “Balanced Budget Act”) requires the total expenses of the Operating Fund (both current and amortization of capital assets) (including transfers from the Fiscal Stabilization Fund) to be no greater than revenue (including transfers to the Debt Retirement Fund). Debt repayments in the Debt Retirement Fund also include payments toward the pension liability of the government. The

20

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. 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.

BALANCED BUDGET ACT COMPLIANCE AND BUDGETED FINANCING REQUIREMENT

		Year Ending March 31,												Budget
														Estimate
		2001			2002			2003			2004			2005
		(In millions of dollars)
Total Revenue before Transfer from Fiscal Stabilization Fund and Extraordinary Item			$6,752.0			$6,746.8			$6,970.2			$7,306.2			$7,570.5
Extraordinary Item — Adjustment to estimate for Federal accounting error			—			—			51.1			—			—
Total Revenue before Transfer from Fiscal Stabilization Fund			6,752.0			6,746.8			7,021.3			7,306.2			$7,570.5
Total Expenses Before Transfer to Debt Retirement Fund			6,615.2			6,737.5			6,943.7			7,439.8			7,471.2
Operating Fund Surplus (Deficit) Before Transfers			136.8			9.3			77.6			(133.6	)		99.3
Transfer from Fiscal Stabilization Fund			—			150.0			23.0			171.0			0.0
Transfer to Debt Retirement Fund			(96.0	)		(96.0	)		(96.0	)		(96.0	)		(96.0	)
Operating Fund Surplus (Deficit)			40.8			63.3			4.6			(58.6	)		3.3
Adjustment for Balanced Budget Legislation purposes:
	Disaster Expenditures (1)		—			—			—			71.0			—
Budgetary Surplus for Balanced Budget Legislation purposes			$40.8			$63.3			$4.6			$12.4			$3.3
Financing Requirements
Refinancing
For General Government Programs															$1,480.1
For The Manitoba Hydro-Electric Board															93.4
For Other Self-Sustaining Programs															30.0
New Cash Requirements
For General Government and Capital Investments															121.6
For The Manitoba Hydro-Electric Board															353.4
For Other Self-Sustaining Programs															257.8
Total Provincial Financing Requirement															$2,336.3

     (1) Under The Balanced Budget Act, the Government is not required to include in the determination of the annual operating balance, an expenditure required in the fiscal year as a result of a natural or other disaster in Manitoba that could not have been anticipated and affects the Province or a region of the Province in a manner that is of urgent public concern. Expenditures totaling $71 million that relate primarily to exceptional costs incurred from forest fire suppression activities and BSE are considered to qualify for exemption under this provision.

     Total Operating Fund expenses and transfers to the Debt Retirement Fund for the year ended March 31, 2004 were $7,535.8 million, up $183.7 million from the budget estimate of $7,352.1 million, reflecting unbudgeted expenditures for disaster related programming, higher than anticipated healthcare, support to education and election costs offset by lower Public Debt costs. Total Operating Fund Revenue plus a transfer of $171 million from the Fiscal Stabilization Fund, was $7,477.2 million or $115.3 million higher than the budget estimate of $7,361.9, reflecting a larger transfer from the Fiscal Stabilization Fund and increased own source revenues offset by the unrealized Manitoba Hydro distribution and lower revenues from Crown Enterprises. The reported

21

operating deficit for the year ended March 31, 2004 was $58.6 million. The Government has identified expenditures totaling $71 million that relate primarily to exceptional forest fire suppression expenses and Bovine Spongiform Encephalopathy (BSE) that qualify for exemption under the natural disaster section of The Balanced Budget Legislation. For Balanced Budget Legislation purposes the budgetary surplus for the year ended March 31, 2004 was $12.4 million as compared to an estimated surplus of $9.8 million.

      The budget for the fiscal year ending March 31, 2005 was presented to the Legislature on April 19, 2004.

      The following discussion of Operating Fund Revenue and Operating Fund Expenditure reflects budgeted and actual amounts used in the budgetary process of the Legislative Assembly, which may differ from corresponding amounts reflected in the Summary Financial Statements.

Operating Fund Revenue

      Provincial Source Revenues. Of its Total Revenue Before Transfer from Fiscal Stabilization Fund budgeted for the fiscal year ending March 31, 2005, the Province expects to derive $5,123.4 million or about 67.7% 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, 2005 is budgeted at $1,778.3 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 $360,000) is 5%. The small business threshold will be increased to $400,000 on January 1, 2005. The rate for large businesses was reduced from 16.0% of taxable income to 15.5% on January 1, 2004 and will be reduced further to 15.0% on January 1, 2005. Corporation income tax revenue for the fiscal year ending March 31, 2005 is budgeted at $313.0 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, 2005 is budgeted at $1,154.3 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, 2005, the revenues from gasoline and motive fuel taxes are budgeted at $235.3 million. There is also a tobacco tax of 17.5¢ per cigarette and 16.5¢ per gram of fine-cut tobacco. Total tobacco tax revenue for the fiscal year ending March 31, 2005 is budgeted at $203.7 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

22

rate on taxable payroll is 2.15%. For the fiscal year ending March 31, 2005, the levy is budgeted to yield $280.8 million.

      Federal Government Transfers. Transfer payments from the Federal Government are budgeted to provide $2,447.0 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, 2005. Unconditional transfers, primarily receipts under a Federally funded provincial revenue equalization formula and cash payments under the Canada Health Transfer (“CHT”) and Canada Social Transfer (“CST”), 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 $1,435.8 million from Federal equalization payments in the fiscal year ending March 31, 2005.

      The CHT and CST Arrangements provide Federal assistance to the Province in respect of its health care, post-secondary education, early childhood development and social service programs through transfers of taxing authority and cash payments. The amount of Federal assistance does not bear a direct relationship to actual program costs, but rather is calculated on the basis of per capita entitlements. The total cash component of these arrangements is budgeted at $808.4 million for Manitoba for the fiscal year ending March 31, 2005. In addition $55.0 million from the Health Reform Fund and $42.1 million for other health funds will be received in fiscal year 2004/ 05.

      On September 16, 2004, the Federal, Provincial and Territorial governments reached an agreement to provide additional Federal assistance in respect of Provincial and Territorial health care programs. Under this agreement increased funding to Provincial and Territorial governments will total $2.1 billion in the fiscal year ending March 31, 2005, $3.1 billion in the fiscal year ending March 31, 2006 and $3.4 billion in the fiscal year ending March 31, 2007. Manitoba’s share of the increase in Federal funding will be in proportion to its share of the national population, which in 2004, was approximately 3.7%.

      The new agreement also provides an escalator clause for the CHT. The new national CHT payment to Provincial and Territorial governments, $19.0 billion for the fiscal year ending March 31, 2006, will be escalated by 6.0% per annum beginning in the fiscal year ending March 31, 2007.

      As part of this agreement, Provincial and Territorial governments have committed to an action plan to improve access to health care, including reduced waiting times for procedures, improved home care coverage, cooperation on a national pharmaceutical strategy and a pan-Canadian public health strategy. These initiatives would also have a strong focus on innovation and enhanced public accountability.

      The Equalization Program has been subject to review every five years. It was renewed for a five-year period beginning April 1, 2004. During the First Ministers Meeting of September 13-15, 2004, the Federal Government announced changes to the Equalization Program. These changes included increasing the total entitlement to Equalization receiving provinces by $1,148 million for the 2004/05 entitlement year to $10 billion. These changes will increase Manitoba’s entitlement by $184 million for the 2004/05 entitlement year. In addition, the total entitlement to the Equalization receiving provinces will be established at $10.9 billion for the 2005/06 entitlement year, and will increase by 3.5% per annum in each subsequent entitlement year. The Federal Government also has announced that it will convene a panel of experts to provide advice on the future allocation of equalization payments among the provinces. The panel’s review will commence in the fall of 2004 with a view to reporting by the end of 2005. The Federal Government has

23

indicated that a new approach to the allocation of Equalization among provinces will be implemented for the 2006/07 entitlement year.

      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.

      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.

Operating Fund Expenditure

      Health and Community Services. For the fiscal year ending March 31, 2005, expenditure on Health and Community Services is budgeted at $4,097.1 million, an increase of 3.7% over the prior year. This is the largest single expenditure category and represents 53.7% 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 $3,161.3 million for the fiscal year ending March 31, 2005, an increase of 3.3% over the prior year’s budget.

      Also included in this category is $912.8 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, 2005 is budgeted at $1,465.4 million, an increase of 0.5% 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 $879.2 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 $541.9 million for the fiscal year ending March 31, 2005.

      Economic and Resource Development. Expenditure on economic and resource development is budgeted at $816.8 million for the fiscal year ending March 31, 2004, an increase of 16.1% from the prior year mainly due to the reallocation of interest charges on capital assets from Public Debt. This represents 10.7% of Manitoba’s total budgeted expenditure and transfer to the Debt

24

Retirement Fund. The largest item in this category is Transportation and Government Services, amounting to $384.8 million.

      Consumer Services, Public Protection and Other Government Services. Expenditure for Consumer Services, Public Protection and Other Government Services is budgeted at $579.4 million, a decrease of 11.2% over the prior year mainly due to the effects of disaster related expenditures.

      Other. The Province also provides property and cost-of-living tax credits to residents of Manitoba, budgeted at $232.4 million for the fiscal year ending March 31, 2005.

      Expenditure for Provincial assistance to local governments is budgeted at $110.6 million for the fiscal year ending March 31, 2005 and includes $66.6 million for grants to the City of Winnipeg and $14.9 million for grants in lieu of taxes to municipalities.

      The net cost of servicing total direct public debt after deducting recoveries from Crown Organizations, investment earnings and interest on department’s capital asset is budgeted at $238.7 million, a decrease of 23.1% over the prior year mainly due to the reallocation of interest charges on capital assets to individual departments. For the fiscal year ending March 31, 2005, the gross interest expense for the Province’s direct funded debt is estimated to be $1,183.4 million, which is reduced by $216.3 million of interest income, $643.6 million of debt on which interest is recovered from Crown Organizations and other government entities and $84.8 million in interest recovery on department’s capital asset purchases.

25

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 year ending 2003. 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, 2004, was $335.6 million in respect of the Province’s total loans and advances to its Crown organizations in the amount of $7,562.9 million at such date.

      The following table summarizes the loans and advances of the Province’s principal Crown organizations for the years 2000 through 2004 and the allowance for losses on realization of assets as at March 31, 2004:

LOANS AND ADVANCES TO

CROWN ORGANIZATIONS AND GOVERNMENT ENTERPRISES (1)

	As at March 31,
											2004
											Valuation
	2000		2001		2002		2003		2004		Allowance
	(In thousands of dollars)
The Manitoba Hydro-Electric Board (2)		$6,854,360		$7,017,104		$7,221,434		$6,374,894		$6,492,818	$	—
The Manitoba Housing and Renewal Corporation (3)		370,077		355,007		351,968		345,052		336,739		247,035
The Manitoba Agricultural Credit Corporation		310,811		314,545		326,423		311,627		373,388		39,406
The Manitoba Lotteries Corporation (4)		—		170,000		170,000		173,700		173,076		—
Manitoba Development Corporation		87,477		88,168		104,378		107,184		122,407		43,912
Other		92,236		84,809		90,022		77,666		64,487		5,274
Total		$7,714,961		$8,029,633		$8,264,225		$7,390,123		$7,562,915	$	335,627

     (1) Crown Organizations and Government Enterprises also have debt not guaranteed by the Province which consists of $180.6 million held by Canada Mortgage and Housing Corporation, an agency of the Federal Government, $14.5 million held by various First Nation Bands and $3.0 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) It is the policy of the Government to create or change valuation allowances to reflect the estimated realizable value of loans made to crown agencies, boards and commissions. This assessment is based on a

26

review of the organization’s most recent financial statements and any accumulated deficit adjusted by prospective recoveries from future operations. Because it was determined that Manitoba Housing and Renewal Corporation (MHRC), in prior years, had not been amortizing their tangible capital assets in accordance with Canadian GAAP, MHRC’s accumulated deficit, for the year ended March 31, 2003, was understated and had to be increased to reflect additional accumulated amortization. As a result, there was an increase made to the MHRC valuation allowance of $229 million, an increase in accumulated deficit of $230 million and a decrease in expense of $1 million.

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

     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, 2004, the Corporation had total assets of $601.3 million represented by $303.3 million of projects completed or under construction, owned land held for development and/or sale having a book value of $14.8 million, loans and mortgages receivable of $165.9 million and other assets of $117.3 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, 2004, the Corporation had total assets of $354.6 million, of which $266.4 million represented receivables secured by first mortgages on farmland and buildings. For the fiscal year ended March 31, 2004, the Corporation’s operating deficit was $9.7 million, after a Provincial operating grant of $5.6 million. As at March 31, 2004, the accumulated deficit of the Corporation was $36.8 million, primarily representing an allowance for doubtful accounts which the Province will fund as accounts are written off.

27

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 2000 through 2004.

DIRECT FUNDED DEBT OF THE PROVINCE  (1)

		As at March 31,
		2000		2001		2002		2003		2004 (2)
		(In thousands of dollars)
Direct Funded Debt Payable in:
	Canadian Dollars (3)	$	11,115,797	$	11,548,212	$	11,807,490	$	11,812,749	$	13,120,739
	Issues hedged to Canadian Dollars		2,852,563		2,624,374		3,221,628		3,348,799		3,210,936
	U.S. Dollars		5,087,250		4,765,523		3,734,567		3,305,925		2,227,850
	Issues hedged to U.S. Dollars		574,016		1,015,640		1,555,051		939,179		957,913
Total Direct Funded Debt			19,629,626		19,953,749		20,318,736		19,406,652		19,517,438
	Less: Sinking Funds		6,411,147		6,188,797		6,485,514		5,805,288		4,730,421
	Net Direct Funded Debt	$	13,218,479	$	13,764,952	$	13,833,222	$	13,601,364	$	14,787,017
Raised for the purpose of:
	General Government Programs (4)	$	6,718,334	$	6,788,756	$	6,643,283	$	6,641,425	$	6,859,058
	The Manitoba Hydro-Electric Board		5,566,339		5,670,440		5,701,237		5,398,925		5,764,322
	Other Self-Sustaining Debt		933,806		1,305,756		1,488,702		1,561,014		1,685,995
	Loans Payable to the Government of Canada and Government Enterprises (5)		—		—		—		—		477,642
	Net Direct Funded Debt	$	13,218,479	$	13,764,952	$	13,833,222	$	13,601,364	$	14,787,017

     (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. All U.S. dollar debt has either been hedged to Canadian dollars or is the responsibility of Manitoba Hydro, which has significant U.S. dollar revenues.

     (2) For additional information as to the direct funded debt of the Province, see “Tables of Supplementary Information — Table III.” Subsequent to March 31, 2004, the Province issued funded debt of $1,990 million in 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, 2003 and 2004, the amounts of such debentures were $1,128 million and $1,002 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.

28

     (5) In Fiscal Year 2004, the Province, in accordance with Canadian GAAP, changed its accounting treatment for certain amounts owed to the Federal Government and for debentures issued by certain school boards and hospitals, the debt service of which is paid with grants from the Government.

     Amounts owed to the Federal Government over time, which were previously treated as accounts payable are now accounted for as loans payable.

     With respect to debentures issued by school boards and hospitals, previously the Province recognized expense over the life of the debentures as grants for debt service were made. Now the obligation to fund debt service is expensed in full at the time the debenture is issued. The debentures are held by the Provincial Sinking Fund and Manitoba Public Insurance (MPI), (a crown corporation). Debentures held by MPI are recorded as “Loans Payable to Government Enterprises”.

     The Government also recognized a loan payable in respect of the pension liability of the Manitoba Liquor Control Commission.

     The Province has not restated the financial statements of previous years. The effect of this change for prior years was reflected in the accumulated deficit and in the increase in loans payable recorded by the Province.

     For additional information, see footnotes to the Summary Financial Statements which will be filed as an amendment to the Province’s Annual Report on Form 18K/A.

29

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 2000 through 2004.

GUARANTEED DEBT OF THE PROVINCE (1)

			As at March 31,
			2000		2001		2002		2003		2004
			(In thousands of dollars)
Guaranteed Debt Payable in:
	Canadian Dollars			$421,219		$416,102		$595,190		$979,202		$910,083
	U.S. Dollars			—		—		—		—		12,450
		Total Guaranteed Debt		421,219		416,102		595,190		979,202		922,533
		Less: Sinking Funds and Other Related Trust Funds		180,473		25,084		25,447		26,292		30,217
	Net Guaranteed Debt (2)			$240,746		$391,018		$569,743		$952,910		$892,316
Issued by:
	The Manitoba Hydro-Electric Board			$231,699		$382,086		$562,014		$944,831		$884,281
	Other			9,047		8,932		7,729		8,079		8,035
		Net Guaranteed Debt (2)		$240,746		$391,018		$569,743		$952,910		$892,316

     (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 $27.5 million as at March 31, 2004, comprised of $0.5 million of mortgages, and $27 million of bank lines of credit.

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

30

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, 2004:

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		$521		$12		$533		$—		$533
2005		1,569				1,569		335		1,234
2006		1,708		264		1,972		218		1,754
2007		1,384		655		2,039		250		1,789
2008		1,667				1,667		165		1,502
2009		2,022		323		2,345		796		1,549
		8,871		1,254		10,125		1,764		8,361
2010-2014		2,865		1,025		3,890		1,267		2,623
2015-2024		2,956		919		3,875		1,671		2,204
2025-2043		2,072		—		2,072		58		2,014
2005-2018 Government Enterprises		341		—		341		—		341
2005-2015 Government of Canada		136		—		136		—		136
		$17,241		$3,198		$20,439		$4,760		$15,679

     (1) The table does not include contingent obligations in the amount of $27.5 million as at March 31, 2004, comprised of $0.5 million of mortgages, and $27 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.$2.44 billion) is stated at the Canadian dollar equivalent at March 31, 2004.

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, 2004, was $197.7 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, 2004 amounted to $1,034 million, including $333 million of accounts payable, $224 million of accrued interest and $477 million of other accrued charges. This unfunded debt was offset by current assets of the Province in the amount of $630 million, represented by $360 million of March 2004 tax revenue receivables, $107 million of other receivables, $57 million of interest receivable and $133 million of accounts receivable from the Federal and other governments and $72 million in cash and equivalents, less a valuation allowance of $99 million.

31

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 2000 through 2004.

CONSOLIDATED FUNDED DEBT OF THE MANITOBA PUBLIC SECTOR

			As at March 31,
			2000			2001			2002			2003			2004
			(In millions of dollars)
Issued for the purpose of:
	General Government Programs			$9,981			$9,955			$10,147			$10,373			$10,055
		Less Sinking Funds		(3,263	)		(3,158	)		(3,496	)		(3,723	)		(3,188	)
	Net General Government Programs			6,718			6,797			6,651			6,650			6,867
	The Manitoba Hydro-Electric Board			7,503			7,655			7,845			7,382			7,422
		Less Sinking Funds		(1,470	)		(1,374	)		(1,547	)		(1,004	)		(761	)
	Net Manitoba Hydro-Electric Board			6,033			6,281			6,298			6,378			6,661
	Other Crown Organizations, Public Sector Entities and Loans Payable			5,242			5,213			5,062			4,502			4,427
		Less Sinking Funds		(2,297	)		(2,142	)		(1,976	)		(1,578	)		(1,179	)
	Net Other Crown Organizations, Public Sector Entities and Loans Payable			2,945			3,071			3,086			2,924			3,248
	Net Public Sector Debt			$15,696			$16,149			$16,035			$15,952			$16,776
Consisting of:
	Direct Debt of the Province (1)			$19,614			$19,723			$19,920			$18,959			$18,539
	Guaranteed Debt of the Province (1)			421			416			595			979			923
	Non-Guaranteed Debt of Crown Organizations, Other Public Sector Entities and Loans Payable			2,691			2,684			2,539			2,319			2,442
Total Public Sector Debt				22,726			22,823			23,054			22,257			21,904
	Less: Accumulated Sinking Funds			(7,030	)		(6,674	)		(7,019	)		(6,305	)		(5,128	)
		Net Public Sector Debt		$15,696			$16,149			$16,035			$15,952			$16,776

     (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.

32

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 2000 through 2004, including per capita data based upon population at July 1 of the preceding calendar year:

PUBLIC SECTOR DEBT INFORMATION

		As at March 31,
		2000			2001			2002			2003			2004
Total Net Consolidated Funded Debt of the Manitoba Public Sector (in millions)			$15,696			$16,149			$16,035			$15,952			$16,776
	Per Capita		13,738			14,074			13,928			13,804			14,442
	As a Percent of Personal Income		58.5	%		56.9	%		54.6	%		52.9	%		54.0	%
	As a Percent of Gross Domestic Product		49.2			47.4			45.5			43.1			43.6
Total Net Direct Funded Debt of the Province (in millions)			$13,218			$13,765			$13,833			$13,601			$14,787
	Per Capita		11,569			11,997			12,015			11,770			12,730
	As a Percent of Personal Income		49.2	%		48.5	%		47.1	%		45.1	%		47.6	%
	As a Percent of Gross Domestic Product		41.4			40.4			39.3			36.8			38.4
Net Debt Issued for General Government Programs (in millions)			$6,718			$6,798			$6,651			$6,649			$6,867
	Per Capita		5,880			5,925			5,777			5,754			5,912
	As a Percent of Personal Income		25.0	%		23.9	%		22.6	%		22.0	%		22.1	%
	As a Percent of Gross Domestic Product		21.0			19.9			18.9			18.0			17.8
Net Cost of Servicing General Government Program Debt as a Percent of Provincial Revenue			7.1	%		7.6	%		6.1	%		4.6	%		4.3	%

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, 2004 was $34 million ($30 million in 2003).

      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 $1,545 million as at March 31, 2004 ($1,501 million in 2003).

      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 $1,971 million at March 31, 2004 ($1,878 million in 2003).

      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. The current balance of the Pension Assets Fund is $267 million.

33

      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, 2004 ($32 million in 2003).

      An actuarial report was completed for the Judge’s Supplemental Plan as at March 31, 2003 and provides a formula to update the Government’s pension liability, resulting in an actuarial liability on an indexed basis of $21 million at March 31, 2004 ($19 million in 2003).

      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,
	2003		2004
	(In millions of
	dollars)
Civil Service Superannuation Fund		$1,501		$1,545
Members of Legislative Assembly		32		32
Teachers’ Retirement Allowances Fund		1,878		1,971
Judge’s Supplemental Pension Plan and Other Plans		21		23
Total		$3,432		$3,571

      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, 2004 of approximately $507 million ($479 million in 2003). The plan has a surplus of $49 million as at March 31, 2004 ($22 million deficit in 2003). 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 254,000 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. On this basis, no payments were made for the year ended March 31, 2004 and no future payments will be necessary in accordance with the legislative provisions.

      In September 2002, Manitoba Hydro purchased all of the assets and liabilities of Winnipeg Hydro from the City of Winnipeg. Winnipeg Hydro operated two hydraulic generating stations

34

which add a capability of 145 megawatts to the system capacity. 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 Winnipeg within five years of the date of purchase.

      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 the former Winnipeg Hydro are interconnected and operate as an integrated system.

      Manitoba Hydro currently provides electricity to approximately 506,000 customers and natural gas service to approximately 254,000 customers within the province. In addition, it exports electricity to approximately 40 electric utilities in the U.S., Ontario and Saskatchewan.

      At March 31, 2004, Manitoba Hydro’s total generating capability was 5,481 megawatts. Of this generating capability, hydro-electric stations represented 91.2%, thermal-electric (natural gas and coal) stations 8.6% 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, 2004, 70.0% of the Manitoba integrated system energy supply of 26.4 billion kilowatt-hours was provided by self-renewing hydro-electric generation. The portion of total supply provided by thermal generation was 3.3% and by imports was 26.7%.

Operations

      The net loss from consolidated operations for the fiscal year ended March 31, 2004 was $436 million, compared to the net income of $71 million in the previous fiscal year. The decrease was mainly due to a significant decline in hydraulic generation stemming from lower water flows. The prolonged drought conditions resulted in reduced electricity sales to extraprovincial customers and increased fuel and power purchases to support firm supply commitments.

Electricity

      As at March 31, 2004, Manitoba Hydro owned and operated 14 hydro-electric generating stations having a total installed electric generating capability of 4,998 megawatts, including five stations with a total capability of 3,925 megawatts located on the Nelson River. Manitoba Hydro also operated two thermal-electric generating stations having a total installed capability of 473 megawatts and four isolated diesel sites having an installed capacity of 9 megawatts.

      As at March 31, 2004, the high voltage transmission facilities of Manitoba Hydro consisted of approximately 11,423 circuit kilometers, representing a total investment of $727 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 550,000 kilowatts and interconnections with Ontario have a transfer capability of 263,000 kilowatts. The interconnections with the United States have a total export transfer capability of 2,250,000 kilowatts and import transfer capability of 1,050,000 kilowatts.

      During the fiscal year ended March 31, 2004, Manitoba Hydro sold a total of 23.7 billion kilowatt-hours of electricity, representing a decrease of 16.6% from the fiscal year ended March 31, 2003. Scheduled extraprovincial sales accounted for 4.4 billion kilowatt-hours, or 18.5% of total electricity sales for the fiscal year ended March 31, 2004. Scheduled imports accounted for 7.1 billion kilowatt-hours, an increase of 131.8% from the fiscal year ended March 31, 2003.

35

Natural Gas

      Manitoba Hydro’s subsidiary, Centra Gas provides natural gas distribution and related energy services to approximately 254,000 customers that are located in nearly 100 communities throughout southern Manitoba. Centra Gas owns a network of transmission (1,727 kilometers) and distribution (6,880 kilometers) mains to meet the natural gas requirements of its customers.

      For the year ended March 31, 2004, Centra Gas had total gas deliveries of 75.0 billion cubic feet. These gas deliveries were comprised of 23.1 billion cubic feet to residential customers, 31.5 billion cubic feet to commercial and industrial customers and 20.4 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 response to a Manitoba Hydro rate application to address the financial loss caused by drought conditions, the PUB approved a 5% rate increase effective August 1, 2004 and conditionally approved interim rate increases (subject to subsequent review) of 2.25% effective April 1, 2005 and October 1, 2005 across all customer classes. An earlier PUB order in June 2003 had directed Manitoba Hydro to decrease rates 1% for general service small customers and 2% for general service large customers. These decreases were retroactive to April 1, 2003 and were implemented on January 1, 2004.

      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 primary gas price changes. Centra also makes periodic rate applications for changes in non-commodity costs.

36

STATISTICAL INFORMATION

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

				Year Ended March 31,
				2000			2001			2002			2003			2004
Electricity
Installed Generating Capability Including Winnipeg Hydro (in megawatts)					5,124			5,219			5,240			5,475			5,481
Manitoba Firm Peak Demand (in Megawatts)					3,524			3,637			3,760			3,916			3,959
Manitoba & Winnipeg Hydro System Electric Energy (in millions of kilowatt- hours)
	Generated				30,155			32,697			32,643			29,178			19,349
	Purchased				464			333			1,512			3,043			7,053
					30,619			33,030			34,155			32,221			26,402
Electric Energy Sales (1) (in millions of kilowatt-hours) Manitoba					15,777			16,653			16,916			18,907			19,280
	Extraprovincial				10,868			12,065			12,091			9,463			4,389
			Total Electric Energy Sales		26,645			28,717			29,007			28,370			23,669
Revenue from Sale of Power (in thousands of dollars)
	Manitoba				$737,230			$781,064			$786,036			$875,841			$918,231
	Extraprovincial				376,570			479,673			587,893			463,428			350,994
			Total Revenue from Sale of Power		$1,113,800			$1,260,737			$1,373,929			$1,339,269			$1,269,225
Number of Customers (at end of period)					402,023			403,040			405,535			501,975			505,883
Average Revenue per kilowatt-hour
	Manitoba				4.67	¢		4.69	¢		4.65	¢		4.63	¢		4.76	¢
	Extraprovincial				3.46			3.98			4.86			4.90			5.03
Average Cost per kilowatt-hour of Electric Energy Sold (excluding finance expense)					2.13	¢		2.13	¢		2.46	¢		2.95	¢		4.79	¢
Natural Gas (2) Gas Deliveries (in billions of cubic feet)
	Residential				18.7			24.7			22.8			25.2			23.0
	Commercial/ Industrial				25.6			34.4			31.7			34.6			31.5
	Transportation				12.9			17.6			17.7			22.6			20.4
			Total Gas Deliveries		57.2			76.7			72.2			82.4			74.9
Number of Customers (at end of period)					245,761			248,074			249,351			251,273			253,631
Revenue from Sale of Natural Gas (in thousands of dollars)
	Residential				$136,763			$239,969			$224,704			$247,413			$234,781
	Commercial/ Industrial				129,482			258,672			248,045			260,832			251,994
	Transportation				1,388			1,836			4,127			4,016			4,354
	Other				1,074			2,803			2,471			2,587			2,517
		Total Revenue from the Sale of Natural Gas			$268,707			$503,280			$479,347			$514,848			$493,646

     (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 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.

37

     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 V, VI and VII.”

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, 2004, 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, 2009.

CAPITAL EXPENDITURE

	Year Ending March 31,
									Estimated
	2001		2002		2003		2004		2005		2006		2007-2009
	(In thousands of dollars)
Electricity
Generating Plant		$109,811		$153,070		$153,982		$110,644		$185,009		$260,579		$1,047,744
Major Transmission & Stations		81,102		95,169		116,447		128,500		142,526		107,414		454,116
Distribution & Other		150,148		171,743		192,366		213,523		255,340		253,995		634,140
Natural Gas
Distribution & Other		21,121		18,740		21,658		31,572		21,840		22,568		70,352
		$362,182		$438,722		$484,453		$484,239		$604,715		$644,556		$2,206,352

      Capital expenditures, excluding new generation and transmission expenditures, are estimated to total $2,050 million for the five-year period ending March 31, 2009. Manitoba Hydro expects internally generated funds to be $1,689 million or approximately 82% of these capital expenditures during this period. These amounts do not include any of the possible new hydraulic projects discussed below.

      Manitoba Hydro has installed seven wind monitoring sites throughout the province to collect information on wind conditions in order to evaluate wind generation opportunities. The utility plans to produce or purchase 250 megawatts of wind power or about five percent of Manitoba Hydro’s generating capacity should it be viable from an economical and technical perspective.

      Manitoba Hydro has five generating stations with a total installed generating capability of 3,925 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.

      Based on Manitoba electricity needs, and after including the resources provided by wind, Power Smart initiatives, and upgrading of existing facilities, 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 2024. However, Manitoba Hydro is actively exploring the feasibility of building one or more new hydro-electric generating stations prior to 2024 in order to take advantage of export market opportunities. Agreements in principle that involve partnership arrangements and equity participation have been reached with First Nations in the vicinity of the Wuskwatim and Gull/Keeyask projects and the Corporation is in the final stages of completing a Project Development Agreement with Nisichawayasihk First Nation with respect to the 200MW Wuskwatim generating station proposed to be built on the Burntwood River. In 2004, the Clean Environment Commission held extensive public hearings to review the proposed advancement of this project and related transmission to an estimated in-service date of 2010. On October 4, 2004, the Clean Environment Commission issued its report on the proposed Wuskwatim generating station and recommended the licensing of the project. The Commission was satisfied that the estimated $1.0 billion capital expenditure for the project is economic and that, with suitable

38

environmental monitoring, the environmental effects will not be significant. A final review by the Board of Manitoba Hydro and a community vote in Nisichawayasihk Cree Nation are still necessary before the decision will be made to proceed with the project.

      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 a large firm power sale involving the development of additional hydraulic generation in Manitoba including the 1,250-megawatt Conawapa generating station and the construction of high-voltage transmission line between the two provinces. On September 30, 2004, the governments of Manitoba and Ontario announced that they would proceed with a detailed technical study on a Clean Energy Transfer Initiative (CETI), a proposed hydroelectric power project in Northern Manitoba and a transmission line that would bring power from Manitoba to Ontario. The technical study would include detailed engineering and cost analysis, further discussions with First Nations, as well as a more detailed analysis on overall project economics.

      As a result of Manitoba Hydro’s generation and transmission activities in the past, a number of communities have experienced adverse impacts. To provide fair compensation to these communities, Manitoba Hydro has been engaged in discussions to reach settlement agreements. As of March 31, 2004, Manitoba Hydro has spent $540 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 date, approximately $87 million of the funds has been spent for compensation and mitigation initiatives at Cross Lake. Manitoba Hydro and Manitoba continue to work with Cross Lake First Nation to develop and implement an action plan for fulfillment of obligations under the NFA. In addition, discussions are ongoing to reach concluding arrangements with the remaining communities not covered by the NFA.

      On August 3, 2004 the Fox Lake Cree Nation agreed to submit for community approval the terms of a settlement agreement with Manitoba Hydro and the Province of Manitoba that will address adverse effects of past hydroelectric development in the lower Nelson River area. Manitoba Hydro’s financial commitment for the settlement agreement is $15.2 million over 15 years.

39

MANITOBA INTEGRATED SYSTEM

EXISTING AND POTENTIAL GENERATING STATIONS

EXISTING GENERATING STATIONS

Generating Station	River	Winter Capability
		(in Megawatts)
Jenpeg	Nelson		132
Kelsey	Nelson		223
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		78
Grand Rapids	Saskatchewan		479
Laurie River I and II	Laurie		10
Total Hydraulic Capability			4,998
Brandon & Selkirk Thermal			473
Total Integrated System Capability			5,471
POTENTIAL HYDRAULIC SITES (1)
Conawapa	Nelson		1,250
Gillam Island	Nelson		820
Gull/Keeyask	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			9,381

     (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

40

• 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

      Manitoba Hydro is 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 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.

41

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 1999 through 2003.

	Average Noon Spot Rates
Foreign Currency	1999		2000		2001		2002		2003
	(Canadian dollars per unit of foreign currency)
United States Dollars (1)		$1.4858		$1.4852		$1.5484		$1.5704		$1.4015

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

	1999		2000		2001		2002		2003
High		$1.5475		$1.5632		$1.6050		$1.6132		$1.5747
Low		1.4420		1.4378		1.4901		1.5110		1.2924

Source: Bank of Canada.

     At March 31, 2004, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.3105.

42

TABLES OF SUPPLEMENTARY INFORMATION

		Page
I.	Summary Financial Statements
	— Summary Statement of Revenue and Expense		44
	— Summary Statement of Financial Position		45
	— Summary Statement of Cash Flow		47
II.	Summary Financial Statements — Government Enterprises
	— Summary of Operating Results and Financial Position		48
III.	Statement of Direct Funded Debt of the Province		49
IV.	Statement of Securities Guaranteed by the Province		56
V.	Manitoba Hydro Consolidated Statement of Operations		58
VI.	Manitoba Hydro Consolidated Balance Sheet		59
VII.	Manitoba Hydro Consolidated Statement of Changes in Financial Position		60

43

I. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF REVENUE AND EXPENSE

FOR THE YEAR ENDED MARCH 31, 2004

(with comparative figures for 2003)

			2003			2004
			(In millions of
			dollars)
REVENUE
	Manitoba Collections:
		Retail sales tax		1,007			1,064
		Fuel taxes		231			233
		Levy for health and education		257			268
		Mining tax		18			22
		Other taxes		461			480
		Fees and other revenue		1,109			1,174
	Government Enterprise Transfers:
		Liquor Control Commission		166			174
		Manitoba Hydro		203			—
		Manitoba Lotteries Corporation		266			235
	Income taxes:
		Corporation income tax		160			289
		Individual income tax		1,636			1,720
	Federal transfers:
		Equalization		1,338			1,414
		Canada Health and Social Transfer		756			917
		Medical Equipment Fund		16			21
		Health Reform Fund		—			37
		Primary Care Transition Fund		1			7
		Shared cost and other		294			320
TOTAL REVENUE				7,919			8,375
EXPENSES
	Health			2,955			3,301
	Education			2,059			2,169
	Family Services and Housing			930			965
	Community, Economic and Resource Development			960			1,042
	Justice and Other Government			724			753
	Debt Servicing			367			329
TOTAL EXPENSES				7,995			8,559
NET LOSS BEFORE EXTRAORDINARY ITEM				(76	)		(184	)
Adjustment to estimate for Federal accounting error				51			—
NET LOSS				(25	)		(184	)
Increase (decrease) in equity in Government Enterprises				(159	)		(420	)
SUMMARY NET LOSS				(184	)		(604	)

44

I. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2004

(with comparative figures for 2003)

			2003			2004
			(millions)
ASSETS
	Cash and cash equivalents			$712			$624
	Temporary investments			228			206
	Amounts receivable			730			746
	Inventories			27			28
	Portfolio investments			33			89
	Loans and advances			579			632
	Equity in Government Enterprises			1,369			949
	Other long-term investments			7			7
	Deferred charge for non-devolved health care facilities (1)			133			121
	Tangible capital assets			2,001			1,945
	Pension assets			151			267
	Assets of non-devolved health care facilities (2)			775			805
TOTAL ASSETS				6,745			6,419
LIABILITIES
	Borrowings			19,746			18,042
		Less: Sinking funds		(5,875	)		(3,024	)
		Less: Debt incurred for and repayable by The Manitoba Hydro-Electric Board and Manitoba Lotteries Corporation		(5,573	)		(5,937	)
				8,298			9,081
		Less: Unamortized foreign currency fluctuation		(81	)		(89	)
	Net borrowings			8,217			8,992
	Accounts payable, accrued charges, provisions and deferrals			1,913			1,890
	Pension liability			3,411			3,571
	Liabilities of non-devolved health care facilities (2)			698			728
TOTAL LIABILITIES				14,239			15,181
ACCUMULATED DEFICIT (3)				$7,494			$8,762

     (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.

     (3) Material adjustments may result from changes in accounting policy or from the correction of an error which are attributable to and identifiable with prior periods. It is the Government’s practise to reflect the effects of such adjustments in the accumulated deficit. Prior year balances are not restated. If Canadian GAAP had been used to record changes in accounting policies and correction of errors, the comparative figures of the financial statements and the opening balance of the accumulated deficit would have changed. The following changes were made to the accumulated deficit in Fiscal Year 2003/04.

45

A.  Tangible Capital Assets

During the year, tangible capital assets acquired in prior fiscal years (cost of $6 million and accumulated amortization of $3 million) were identified and recorded. Accordingly, the accumulated deficit was decreased by $3 million.

During the year, the Province made adjustments to the calculation of the accumulated amortization of the tangible capital assets held by the Manitoba Housing and Renewal Corporation, to be consistent with the Province’s accounting policy. This correction has resulted in a decrease in tangible capital assets of $229 million, a decrease in expenses of $1 million and a corresponding increase in accumulated deficit of $230 million.

B.  Deferred Revenue

During the year, as a result of a change in the designation of certain special funds held by the University of Manitoba from externally restricted funds to internally restricted funds, deferred revenue decreased by $15 million and accordingly the accumulated deficit decreased by $15 million.

Certain Crown organizations adopted a policy of distinguishing restricted contributions from unrestricted contributions. Prior to 2003/04 all contributions were accounted for as restricted contributions. As restricted contributions are recognized as revenue when the related expenses are incurred and unrestricted contributions are recognized as revenue when received, this resulted in a decrease in the accumulated deficit of $1 million.

C.  Amortization of Assets Under Construction

During the year, amortization on assets under construction, recorded by a Crown organization in prior years, was identified and adjusted to zero in accordance with Government policies for these assets. Accordingly, the accumulated deficit was decreased by $3 million.

D.  Judges Pension Adjustment

During the year, an actuarial valuation report of the Government’s liability to the judges under the Supplemental Pension Benefit Plan was completed as at March 31, 2003. In accordance with the formula, the Government’s actuarial liability related to prior fiscal years, of $19 million, was identified and recorded. Accordingly, the accumulated deficit was increased by $19 million.

E.  Legal Aid Private Bar Fees

During the year, The Legal Aid Service Society of Manitoba changed its accounting policy with respect to private bar fees and disbursements to the accrual basis. Prior to this fiscal year, these fees and disbursements were recognized as expenditures based upon the lawyers billing dates rather than the date of providing the required services. This accounting change has resulted in an increase in accounts payable of $4 million and a corresponding increase in accumulated deficit of $4 million.

F.  Restatement of School Board Debentures

The Province has provided funds to school boards to finance capital acquisitions through loans and in turn has held the school board debentures as portfolio investments. The Province provides funding to the school boards to repay these debentures. Canadian GAAP requires the investment in these debentures to be recorded as a grant. This has resulted in an increase in loans payable to MPIC of $271 million, a decrease in sinking funds of $185 million, an increase in expenses of $23 million and a corresponding increase in accumulated deficit of $433 million.

46

I. SUMMARY FINANCIAL STATEMENTS

SUMMARY STATEMENT OF CASH FLOW

AS AT MARCH 31, 2004

(with comparative figures for 2003)

			2003			2004
			($ millions)
Cash and cash equivalents provided by (used in)
Operating activities:
	Summary net loss for the year			(184	)		(604	)
	Changes in non-cash items:
		Temporary investments		(28	)		22
		Amounts receivable		142			(22	)
		Valuation allowance		21			28
		Inventories		(1	)		(1	)
		Portfolio investments		(3	)		(56	)
		Accounts payable, accrued charges, provisions and deferrals		(41	)		(23	)
		Pension liability		194			160
		Amortization of foreign currency fluctuation		17			3
		Amortization of debt discount		10			8
		Amortization of investment discounts and premiums		(14	)		(2	)
		Disposal of tangible capital assets		13			4
		Restatement of amortization		—			230
		Amortization of tangible capital assets		130			139
		Adjustment to Accumulated Deficit — Other		(130	)		(664	)
				126			(778	)
		Changes in equity in Government Enterprises		159			420
				285			(358	)
Investing activities:
	Made			(640	)		(1,279	)
	Realized			986			542
	Acquisition of tangible capital assets			(270	)		(317	)
				76			(1,054	)
Financing activities:
	Debt issued			2,853			3,325
	Debt redeemed			(3,354	)		(2,776	)
	Changes in sinking funds			189			775
				(312	)		1,324
Changes in cash and cash equivalents				49			(88	)
Cash and cash equivalents, beginning of year				663			712
Cash and cash equivalents, end of year				712			624

47

II. SUMMARY FINANCIAL STATEMENTS — GOVERNMENT ENTERPRISES (1)

SUMMARY OF OPERATING RESULTS AND FINANCIAL POSITION

FOR THE YEAR ENDED MARCH 31, 2004 *

(with comparative figures for 2003)

											Resource			Total			Total
			Utilities			Insurance		Finance			Development			2004			2003
			(In millions of dollars)
Results of Operations
	Revenues:
		From operations		1,781			993		1,056			—			3,830			3,802
	Expenses:
		From operations		1,730			975		638			1			3,344			2,837
		Debt servicing		487			—		10			—			497			489
	Total Expenses			2,217			975		648			1			3,841			3,326
	Net Income before surplus distribution			(436	)		18		408			(1	)		(11	)		476
	Surplus distribution — Insurance			—			—		—			—			—			—
	Net Income			(436	)		18		408			(1	)		(11	)		476
	Transfers to the government			—			—		(409	)		—			(409	)		(635	)
	Net increase (decrease) in equity in Government Enterprises			(436	)		18		(1	)		(1	)		(420	)		(159	)
	Net increase (decrease) in equity in Government Enterprises resulting from:
		Increase (decrease) in equity in Government Enterprises													(420	)		(159	)
		Net increase (decrease) in equity in Government Enterprises													(420	)		(159	)

*	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, 2004:

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

48

III. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE

AS AT MARCH 31, 2004

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
Debenture Loans
(A) Payable in Canadian Dollars:
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		550,000	(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)
ES-1		29-Jun-07		2003		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)
EX		1-Dec-08		2003		4.450		250,000	(1)
EG		2-Mar-09		1998		5.250		500,000	(1)
EL		1-Sep-09		1999		6.250		250,000	(1)
EO		25-Jan-11		2001		5.85		325,000	(1)
EO-1		25-Jan-11		2001		5.85		250,000	(1)
CM		15-May-11		1991		10.000		299,827	(1)
ER		3-Dec-12		2002		5.250		250,000	(1)
EW		17-Apr-13		2003		5.500		125,000	(1)
DE		22-Jul-13		1993		8.50		300,000	(1)
EZ		3-Dec-13		2003		5.05		250,000	(1)
EZ-2		3-Dec-13		2004		5.05		250,000	(1)
EY		3-Dec-15		2003		5.200		250,000	(1)
DT		22-Dec-25		1995		7.75		300,000	(1)
CL		5-Mar-31		1991		10.50		599,945	(1)
								7,701,518

49

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
Medium-Term Notes
C039-MTN		3-Jan-05		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)
C059-MTN		19-Dec-05		2003		Floating		50,000	(1)
C041-MTN		7-Feb-06		2002		Floating		85,000	(1)
L007-MTN		28-Feb-07		2003		6.14		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		12,500	(1)
C050-1 MTN		15-Oct-08		2002		Step		8,333	(1)
C057-MTN		20-Oct-08		2003		Floating Step		100,000	(5)
C061-MTN		23-Mar-09		2004		Floating		100,000	(5)
C060-MTN		22-Dec-09		2003		Step		25,000	(5)
C022-MTN		15-Jul-10		1998		5.50		40,000	(1)
C056-MTN		31-Mar-11		2003		5.29		3,406	(1)
C038-MTN		15-May-04		2001		Step		20,000	(5)
L006-MTN		28-Feb-15		2003		5.60		15,000	(5)
C055-MTN		22-Apr-04		2003		5.45		15,000	(5)
C011-MTN		22-Sep-17		1997		6.50		100,000	(1)
C011-2 MTN		22-Sep-17		1997		6.50		55,454	(1)
C011-3 MTN		22-Sep-17		1997		6.50		125,000	(1)
C012-MTN		22-Sep-17		1997		6.50		100,000	(1)
L004-MTN		22-Sep-17		2000		6.50		25,000	(1)
C023-1 MTN		15-Nov-18		1998		5.50		75,000	(4)
C023-2 MTN		15-Nov-18		1998		5.50		25,000	(1)
C023-3 MTN		15-Nov-18		2003		5.50		75,000	(1)
L003-MTN		15-Nov-18		2000		5.50		75,000	(1)
C049-MTN		26-Jul-32		2002		4.31		50,000	(1)
C052-MTN		29-Oct-32		2002		5.975		30,000	(1)
C031-MTN		5-Mar-40		2000		6.20		176,000	(1)
C031-2 MTN		5-Mar-40		2001		6.20		50,000	(1)
C040-MTN		5-Mar-42		2002		6.00		300,000	(1)
C040-2 MTN		5-Mar-42		2002		6.00		50,000	(1)
								2,159,693

50

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
H001-MTN		30-Jun-05		2000		Floating		48,000	(1)
H001-2 MTN		30-Jun-05		2003		Floating		35,000	(1)
H017-MTN		31-Dec-05		2003		Floating		75,000	(1)
H010-MTN		30-Nov-06		2001		STEP		40,000	(5)
H008-MTN		25-Jun-07		2001		S&P TSE 60		15,000	(5)
H011-MTN		17-Jan-08		2002		Floating Step		106,000	(1)
H015-MTN		1-Dec-08		2003		Floating		10,000	(1)
H016-MTN		28-Nov-08		2003		Floating		15,000	(1)
H012-MTN		31-Jan-13		2003		5.400		15,000	(5)
H013-MTN		31-Jul-13		2003		STEP		30,000	(5)
H014-MTN		31-Oct-13		2003		STEP		15,000	(5)
H018-MTN		31-Jan-14		2004		STEP		20,000	(5)
H019-MTN		1-Mar-14		2004		STEP		25,000	(5)
C031-2 HEALTH		5-Mar-40		2001		6.20		50,000	(1)
								499,000
D014-MTN		15-Nov-04		1999		5.10		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)
D071-MTN		15-Apr-04		2003		STEP		30,000	(5)
D073-MTN		20-Aug-08		2003		STEP		15,000	(5)
D074-MTN		22-Aug-08		2003		STEP		20,000	(5)
D084-MTN		1-Oct-08		2003		STEP		25,000	(5)
D051-MTN		16-Dec-08		2002		Equity		15,000	(5)
D013-MTN		15-Nov-09		1999		5.10		25,000	(4)
D026-MTN		14-Apr-10		2000		Floating		15,000	(5)
D072-MTN		1-Jun-10		2003		STEP		30,000	(5)
D075-MTN		15-Jul-10		2003		STEP		20,000	(5)
D080-MTN		15-Sep-10		2003		STEP		10,000	(5)
D063-MTN		22-Nov-10		2002		5.06		15,000	(5)
D047-MTN		15-Apr-04		2002		STEP		10,000	(5)
D048-MTN		15-Apr-04		2002		5.61		15,000	(5)
D054-MTN		15-Jun-12		2002		5.87		15,000	(5)
D057-MTN		15-Jul-12		2002		STEP		10,000	(1)
D062-MTN		1-Dec-12		2002		STEP		15,000	(5)
D070-MTN		20-May-13		2003		STEP		15,000	(5)
D078-MTN		15-Sep-13		2003		STEP		15,000	(5)
D082-MTN		1-Oct-13		2003		STEP		20,000	(5)
D085-MTN		1-Oct-13		2003		STEP		20,000	(5)
D040-MTN		15-Dec-13		2001		STEP		40,000	(5)
D077-MTN		15-Dec-13		2003		STEP		20,000	(5)
D086-MTN		15-Dec-13		2003		STEP		15,000	(5)
D067-MTN		1-Jun-14		2002		STEP		15,000	(5)
D091-MTN		22-Aug-14		2004		STEP		35,000	(5)
D058-MTN		1-Dec-14		2002		STEP		30,000	(5)
D059-MTN		1-Jun-04		2002		5.80		35,000	(5)
D061-MTN		1-Dec-14		2002		5.67		30,000	(5)
D068-MTN		15-Jan-15		2003		STEP		30,000	(5)
D088-MTN		15-Jan-15		2004		5.00		25,000	(5)
D064-MTN		1-Apr-04		2002		5.97		15,000	(5)
D069-MTN		15-Apr-15		2003		5.64		15,000	(5)

51

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
D076-MTN		22-Aug-15		2003		STEP		30,000		(5)
D079-MTN		15-Sep-15		2003		STEP		15,000		(5)
D081-MTN		15-Sep-15		2003		STEP		50,000		(5)
D081-2-MTN		15-Sep-15		2003		STEP		25,000		(5)
D083-MTN		1-Oct-15		2003		STEP		25,000		(5)
D090-MTN		22-Feb-16		2004		STEP		10,000		(5)
D089-MTN		15-Mar-16		2004		STEP		40,000		(5)
D093-MTN		15-Mar-16		2004		6.50		20,000		(5)
D092-MTN		15-Sep-16		2004		5.15		20,000		(5)
D043-MTN		15-Jun-17		2001		STEP		27,000		(5)
D053-MTN		15-Jan-18		2002		STEP		18,000		(5)
D025-MTN		5-Mar-31		2000		6.30		100,000		(5)
D025-1-MTN		5-Mar-31		2000		6.30		150,000		(5)
D025-2-MTN		5-Mar-31		2000		6.30		60,000		(5)
								1,426,000
Canadian Issues Swapped to USD:
EN		22-Jun-05		2000		6.250		300,000
DE		22-Jul-13		1993		8.500		300,000
EZ		3-Dec-13		2003		5.050		196,000
EZ-2		3-Dec-13		2004		5.050		194,500
								(990,500	)
Foreign Issues Swapped to Canadian Dollars:
DM-FX Hedge		3-Aug-04		1994				68,522
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				546,650
EP-1		20-Nov-06		2002				250,000
EV		17-Apr-07		2003				88,650
ET		10-Jan-08		2003				209,600
D087		15-Dec-08		2003				10,400
D060		1-Dec-09		2002				15,800
EM		22-Feb-10		2000				141,500
AZ		17-Jul-16		1986				200,630
C036		21-Nov-16		2001				39,340
C037		1-Nov-16		2001				13,110
BM		15-Jan-18		1988				254,960
BU		1-Dec-18		1988				136,375
CB		15-Jan-20		1990				369,400
CD		1-Apr-20		1990				412,815
EZ-2-FX Hedge		3-Dec-13		2004				208,320
								3,210,936
Total Canadian Dollars								14,006,647

52

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
(B) Payable in U.S. Dollars:
EU		17-Jan-06		2002		2.750		458,675		(1)
EP		20-Nov-06		2001		4.250		655,250		(1)
EP-1		20-Nov-06		2002		4.250		209,680		(1)
EF		1-Oct-08		1998		5.500		327,625		(1)(2)
EM		22-Feb-10		2000		7.500		655,250		(1)(2)
AZ		17-Jul-16		1986		7.750		195,776		(1)(2)
BM		15-Jan-18		1988		9.125		262,100		(1)(2)
EE		15-Sep-18		1988		9.500		262,100		(1)
BU		1-Dec-18		1988		9.625		393,150		(1)
CB		15-Jan-20		1990		8.800		327,625		(1)
CD		1-Apr-20		1990		9.250		393,150		(1)
CO.		15-Sep-21		1991		8.875		393,150		(1)
								4,533,531
Medium-Term Notes (Payable in U.S. Dollars)
U002		23-Feb-05		1995		7.47		32,763		(1)(2)
D087		15-Dec-08		2003		STEP		10,484		(5)
D060		1-Dec-09		2002		STEP		13,105		(5)
								56,352
Foreign Issues swapped to Canadian Dollars:
U002		23-Feb-05		1995		7.470		32,763
EU		17-Jan-06		2002		2.750		458,674
EP-1		20-Nov-06		2002		4.250		209,680
EF		1-Oct-08		1998		5.500		65,525
D060		1-Dec-09		2002		STEP		13,105
EM		22-Feb-10		2000		7.500		262,100
D087		15-Dec-13		2003		STEP		10,484
AZ		17-Jul-16		1986		7.750		195,776
BM		15-Jan-18		1988		9.125		262,100
BU		1-Dec-18		1988		9.625		131,050
CB		15-Jan-20		1990		8.800		327,625
CD		1-Apr-20		1990		9.250		393,150
								(2,362,032	)
Foreign Issues swapped to U.S. Dollars:
DM		3-Aug-04		1994				63,232
DM-FX Hedge		3-Aug-04		1994				(63,232	)
EN		22-Jun-05		2000				264,721
ET		10-Jan-08		2003				176,261
ET-FX		10-Jan-08		2003				(176,261	)
EF		1-Oct-08		1998				60,930
EM		22-Feb-10		2000				127,277
C032		12-Oct-10		2000				61,528
DE		22-Jul-13		1993				246,881
EZ		3-Dec-13		2003				196,575
EZ-2		3-Dec-13		2004				196,575
EZ-2-FX Hedge		3-Dec-13		2004				(196,575	)
								957,912
Total U.S. Dollars								3,185,763

53

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding			Ref
							($ thousands)
(C) Payable in Swiss Francs:
ET		10-Jan-08		2003		2.00		206,760		(1)(2)
								206,760
Swapped to Canadian Dollars:
ET		10-Jan-08		2003		2.00		206,760
								(206,760	)
								0
(D) Payable in Australian Dollars:
EV		17-Apr-07		2003		5.00		99,960		(1)(2)
								99,960
Swapped to Canadian Dollars:
EV		17-Apr-07		2003		Floating		99,960
								(99,960	)
								0
(E) Payable in Japanese Yen:
DW		14-Jun-04		1996		3.45		62,885		(1)(2)
DK		28-Jun-04		1994		4.20		75,462		(1)(2)
DN		19-Jul-04		1994		4.70		62,885		(1)(2)
DM		3-Aug-04		1994		4.50		62,885		(1)(3)
C032		12-Oct-10		2000		1.8950		62,885		(1)(3)
C036		21-Nov-16		2001		2.00		37,731		(1)(2)
C037		21-Nov-16		2001		2.03		12,577		(1)(2)
								377,310
Japanese Yen Issues swapped to Canadian Dollars:
DW		14-Jun-04		1996		3.46		62,885
DK		28-Jun-04		1994		4.20		75,462
DN		19-Jul-04		1994		4.70		62,885
C036		21-Nov-16		2001		2.00		37,731
C037		21-Nov-16		2001		2.03		12,577
								(251,540	)
Japanese Yen Issues swapped to U.S. Dollars:
DM		3-Aug-04		1994		4.50		62,885
C032		12-Oct-10		2000		1.90		62,885
								(125,770	)
Total Japanese Yen								0

54

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

			Year of		Interest
Series	Date of Maturity		Issue		Rate %		Amount Outstanding		Ref
							($ thousands)
Builder Bonds (Payable in Canadian Dollars)
#5		15-Jun-04		1999		Floating		6,531	(6)
		15-Jun-04		1999		Discount		30,377	(1)
#6		15-Jun-05		2000		Floating		12,873	(6)
		15-Jun-05		2000		Discount		36,598	(1)
#7		15-Jun-08		2003		Floating		17,612	(6)
		15-Jun-08		2003		Floating		56,404	(6)
		15-Jun-06		2003		Fixed		111,309	(1)
		15-Jun-08		2003		Fixed		101,966	(1)
		15-Jun-08		2003		Discount		30,321	(1)
								403,991
Total Bonds and Debentures								17,596,401
Canada Pension Plan (Payable in Canadian Dollars)
		April 04 — May 2019				5.67% — 14.06%		1,002,011	(9)
Province of Manitoba Prom Notes
Various		2004/2005				Floating		115,000
Immigrant Investor Program (IIP)
Various		2008/2009				3.62% — 3.75%		1,384
Treasury Bills Payable in Canadian Dollars:
Various		2004/2005				Floating		325,000	(7)
TOTAL BORROWINGS								19,039,796

55

IV. STATEMENT OF SECURITIES GUARANTEED BY THE PROVINCE

AS AT MARCH 31, 2004

			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)	Outstanding Amount		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		27
3		15-Jun-96		1991	Matured		182
4		15-Jun-97		1992	Matured		544
5		15-Jun-01		1996	Matured		1,043
6		15-Jun-02		1997	Matured		247
		15-Jun-00		1997	Matured		250
		15-Jun-02		1997	Matured		386
7		15-Jun-06		2001	Floating		6,866	(6)
		15-Jun-04		2001	5.50		9,864
		15-Jun-04		2001	5.50		200,000
		15-Jun-06		2001	6.00		70,128
Series 8
5 yr floating		15-Jun-07		2002	Floating		22,051	(6)
3 yr fixed		15-Jun-05		2002	4.750		2,439
		15-Jun-05		2002	4.031		100,000
5 yr fixed annual		15-Jun-07		2002	5.50		180,208
5 yr fixed compound		15-Jun-07		2002	5.50		81,206
							675,527
Total The Manitoba Hydro-Electric Board							675,527
Manitoba Hydro Promissory Notes
USD		2004/2005			Floating		12,450
CAD		2004/2005			Floating		81,000
							93,450
City of Winnipeg Hydro Bonds							145,521
Total Self-Supporting Guaranteed Debt							914,498
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							8,035	(8)
Total Securities Guaranteed							922,533

56

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.	Redeemable at holder’s option, prior to maturity.
7.	91 day Treasury Bills issued to the public in the amount of $25,000,000 weekly.
8.	The Province has only guaranteed the principal portion of the issue.

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.

57

V. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF OPERATIONS

			For the Year Ended March 31,
			2000			2001			2002			2003			2004
			(In thousands of dollars)
Revenues
	Electric
		Manitoba		$737,230			$781,063			$786,036			$875,841			$918,231
		Extraprovincial		376,570			479,673			587,893			463,430			350,994
	Other revenue			10,499			11,683			10,415			15,015			18,092
	Natural gas			268,707			503,423			479,346			514,847			493,645
				1,393,006			1,775,842			1,863,690			1,869,133			1,780,962
Expenses
	Operating and administrative			270,787			289,442			297,966			325,856			346,406
	Depreciation			227,165			249,425			259,774			281,348			295,975
	Water rentals			50,681			55,783			112,783			102,856			71,455
	Fuel and power purchased			33,221			48,164			71,423			151,169			568,897
	Capital and other taxes			57,612			59,530			61,361			65,510			72,469
	Cost of gas sold			182,043			384,038			364,882			392,273			374,449
				821,509			1,086,382			1,168,189			1,319,012			1,729,651
Net Income before Finance Expense				571,497			689,460			695,501			550,121			51,311
Finance Expense
	Interest on debt			514,168			540,897			586,798			589,118			572,366
	Amortization of debt discount and expense			8,699			5,822			11,138			726			(7,540	)
	Interest applied to construction			(17,279	)		(17,765	)		(25,212	)		(27,238	)		(34,738	)
	Investment income			(85,938	)		(108,486	)		(91,029	)		(83,776	)		(43,027	)
				419,650			420,468			481,695			478,830			487,061
	Net Income			$151,847			$268,992			$213,806			$71,291			$(435,750	)

58

VI. MANITOBA HYDRO

CONSOLIDATED BALANCE SHEET

		As at March 31,
		2003		2004
		(In thousands of dollars)
ASSETS
Capital Assets
	In service		$9,991,316		$10,398,203
	Less accumulated depreciation		3,042,205		3,240,892
			6,949,111		7,157,311
	Construction in progress		356,095		378,472
			7,305,206		7,535,783
Current Assets
	Bank balances and temporary investments		29,694		6,549
	Accounts receivable and accrued revenue		393,166		370,694
	Interest receivable		9,474		7,391
	Materials and supplies, at average cost		69,420		81,141
			501,754		465,775
Other Assets
	Pension assets		457,310		555,873
	Deferred debt costs		570,792		212,600
	Other deferred expenses and receivables		451,415		416,989
	Sinking fund investments		947,915		715,024
			2,427,433		1,900,486
			$10,234,393		$9,902,044
LIABILITIES AND RETAINED EARNINGS
Long-term debt net of sinking fund			$5,976,975		$6,399,589
Sinking fund shown as an asset			947,915		715,024
			6,924,890		7,114,613
Current Liabilities
	Accounts payable and accrued liabilities		260,028		254,596
	Notes payable		128,000		93,449
	Accrued Interest		110,829		106,798
	Current portion of long-term debt		342,849		275,650
			841,706		730,493
Other Liabilities
	Deferred liabilities and credits		301,752		294,035
	Asset purchase obligation		255,004		249,003
	Pension obligation		478,578		507,408
			1,035,334		1,050,446
Contributions in aid of construction			264,085		273,864
Retained earnings			1,168,378		732,628
			$10,234,393		$9,902,044

59

VII. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED MARCH 31,

		2003			2004
		(In thousands of dollars)
Cash Provided From (Used For) Operations Cash receipts from customers			$1,868,404			$1,813,246
	Cash paid to suppliers and employees		(986,264	)		(1,449,468	)
	Interest paid		(565,034	)		(536,277	)
	Interest received		102,360			46,469
			419,466			(126,030	)
Cash Provided From (Used For) Financing Proceeds from long-term debt			733,643			1,013,129
	Retirement of long-term debt		(977,423	)		(473,838	)
	Premium (Discount) on long-term debt		91,750			—
	Sinking fund withdrawal		643,900			268,788
	Distribution to Province of Manitoba		(200,000	)		(3,468	)
	Mitigation liability		(26,087	)		(16,119	)
	Notes payable		(53,686	)		(35,622	)
	Other		10,979			(541	)
			223,076			752,329
Cash Used For Investment Additions to capital assets net of contributions			(484,779	)		(498,380	)
	Sinking fund payment		(133,795	)		(105,720	)
	Net Obligation to the City of Winnipeg		(23,474	)		(6,002	)
	Other		15,251			(39,046	)
			(626,797	)		(649,148	)
Increase in Cash			15,745			(22,849	)
Cash (Deficiency) at Beginning of Year			13,653			29,398
Cash at End of Year			$29,398			$6,549

60