Province Of Manitoba 18K Annual report (foreign governments) | SEC 8 Nov 02

Exhibit 99.3

(PROVINCE OF MANITOBA LOGO)

PROVINCE OF MANITOBA


	This description of Province of Manitoba is dated as of November 8, 2002 and appears as Exhibit 99.3 to the Province of Manitoba’s Annual Report on Form 18-K to the U.S. Securities and Exchange Commission for the fiscal year ended March 31, 2002.

TABLE OF CONTENTS


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

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

TABLE OF CONTENTS


		Page

Further Information			2
Summary			3
Map of the Province of Manitoba			4
Province of Manitoba			5
	General Information		5
	Constitutional Framework		5
	Provincial Government		5
Economy			6
	General		6
	Economic Structure		7
	Merchandise Exports		12
	Capital Investment		13
	Labor Force		14
	Energy		15
Government Finances			16
	Revenue		20
	Expenditure		21
Summary Financial Statements			23
Crown Organizations and Government Enterprises			24
Public Debt			26
	Debt Record		26
	Direct Funded Debt of the Province		26
	Guaranteed Debt of the Province		27
	Maturity Schedule		28
	Sinking Funds		28
	Unfunded Debt		28
	Consolidated Funded Debt of the Manitoba Public Sector		29
	Selected Debt Information		30
	Pension Liability		30
The Manitoba Hydro-Electric Board			31
	Operations		32
	Rate Matters		33
	Statistical Information		34
	Construction Program		35
	Export Power Sales		37
Canadian Foreign Exchange			39
Tables of Supplementary Information			40

FURTHER INFORMATION

This document appears as an exhibit to Manitoba’s Annual Report to the U.S. Securities and Exchange Commission on Form 18-K for the fiscal year ended March 31, 2002. Additional information with respect to Manitoba is available in such Annual Report, in the other exhibits to such Annual Report and in amendments thereto. Such Annual Report, exhibits and amendments can be inspected and copied at the public reference facilities maintained by the Commission at: Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such documents may also be obtained at prescribed rates from the Public Reference Section of the Commission at its Washington address or, without charge, from Province of Manitoba, Department of Finance, Treasury Division, Room 4, 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 November 6, 2002, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.5582.

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

SUMMARY

The following information is qualified in its entirety by the more

detailed information in this document.

PROVINCE OF MANITOBA


																	Compound
		Year Ended December 31,															Annual
Economy																	Growth Rate
		1997			1998			1999			2000			2001			1997-2001


		(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product			$29,839			$30,871			$31,794			$33,657			$34,992			4.1	%
Change in Real Gross Domestic Product
	Manitoba		4.3	%		3.3	%		2.7	%		2.9	%		1.8	%		—
	Canada		4.0			4.1			5.4			4.5			1.5			—
Manufacturing Shipments			$9,727			$10,373			$10,656			$11,344			$11,466			4.2
Farm Cash Receipts			3,076			2,962			2,959			3,174			3,689			4.6
Capital Investment			5,039			5,152			5,237			5,181			5,337			1.4
Personal Income			25,125			26,312			27,067			28,734			29,887			4.4
Population at July 1 (in thousands)			1,137			1,138			1,143			1,146			1,149			0.3
Average Unemployment Rate			6.5	%		5.5	%		5.6	%		4.9	%		5.0	%		—
Change in Consumer Price Index (Manitoba)			2.2			1.3			1.9			2.5			2.6			—
Average Exchange Rate (C$ per U.S.$)			1.3844			1.4831			1.4858			1.4852			1.5484			—



	Year Ending March 31,

Government Finances —									Budget
Operating Fund									Estimate
	1999		2000		2001		2002		2003


	(In millions of dollars)
Revenue including Fund Transfers (1)		$6,067.7		$6,522.5		$6,752.0		$6,896.8		$7,034.3
Expenses including Fund Transfers (1)		6,036.6		6,511.7		6,711.2		6,833.5		7,023.9

Budgetary Surplus		$31.1		$10.8		$40.8		$63.3		$10.4



Net Direct Funded and Guaranteed		As of March 31,
Debt
		1998			1999			2000			2001			2002


		(In millions of dollars)
Consisting of
	Net Direct Funded Debt		$12,527			$12,797			$13,218			$13,765			$13,833
	Net Provincial Guaranteed Debt		791			601			241			391			570

			$13,318			$13,398			$13,459			$14,156			$14,403

Issued for
	General Government Programs		$6,763			$6,774			$6,718			$6,798			$6,651
	Self-Sustaining Purposes		6,555			6,624			6,741			7,358	(2)		7,752	(2)

			$13,318			$13,398			$13,459			$14,156			$14,403

General Government Programs Debt as a Percentage of Nominal Gross Domestic Product			22.7	%		21.9	%		21.1	%		20.2	%		19.0	%

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

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

LOGO

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, 2002 was 1,150,800, of whom approximately 685,000 lived in Winnipeg, the capital of the Province. Winnipeg has a diversified economic base with significant activity in a variety of manufacturing and service sectors. The city is also a major rail, truck and air transportation hub by virtue of its geographical position in the center of the continent.

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

Constitutional Framework

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

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

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

Provincial Government

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

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. All 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 September 21, 1999, 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.


	1990		1995		1999

New Democrat		20		23		32
Progressive Conservative		30		31		24
Liberal		7		3		1
Total		57		57		57

ECONOMY

General

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

The following table sets forth growth rates in 2001 for key economic indicators and selected sectors of the economy for Manitoba and Canada, as well as the unemployment rate for 2001.


	Manitoba			Canada

Gross Domestic Product		4.0	%		2.6	%
Real Gross Domestic Product		1.8			1.5
Capital Investment		3.0			4.5
Foreign Merchandise Exports		6.9			-2.8
Manufacturing Shipments		1.1			-5.3
Farm Cash Receipts		16.2			9.7
Value of Mineral Production		-15.1			-0.1
Retail Sales		5.7			4.4
Single-Detached Housing Starts		4.8			4.2
Consumer Price Index		2.6			2.6
Employment		0.6			1.1
Average Unemployment Rate		5.0			7.2

Year-to-date data for 2002 indicate that retail sales and single-detached housing starts are increasing while farm cash receipts, foreign merchandise exports, utilities sales and manufacturing shipments are decreasing. According to the July 2002 Statistics Canada survey of investment intentions, capital investment is expected to increase by 2.4% to $5.5 billion as public investment increases 4.5% and private investment increases 1.7%.

The following table sets forth selected indicators of economic activity and the compound annual growth rates for the Province and Canada for the years 1997 through 2001. 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
			1997			1998			1999			2000			2001			1997-2001


			(In millions of dollars unless otherwise indicated)
Nominal Gross Domestic Product (1)
	Manitoba			$29,839			$30,871			$31,794			$33,657			$34,992			4.1	%
	Canada			882,733			914,973			980,524			1,064,995			1,092,246			5.5
Real Gross Domestic Product
	Manitoba (2)			29,839			30,810			31,653			32,569			33,161			2.7
		Change		4.3	%		3.3	%		2.7	%		2.9	%		1.8	%		—
	Canada (2)			$882,733			$918,910			$968,451			$1,012,335			$1,027,523			3.9
		Change		4.0	%		4.1	%		5.4	%		4.5	%		1.5	%		—
Personal Income				$25,125			$26,312			$27,067			$28,734			$29,887			4.4
Personal Income Per Capita (in Dollars)				22,098			23,121			23,681			25,073			26,011			4.2
Retail Sales				8,589			8,773			9,026			9,396			9,937			3.7
Capital Investment				5,039			5,152			5,237			5,181			5,337			1.4
Single-Detached Housing Starts (Units)				2,019			2,368			2,231			2,348			2,460			5.1
Change in Consumer Price Index
	Manitoba			2.2	%		1.3	%		1.9	%		2.5	%		2.6	%		—
	Canada			1.6			0.9			1.7			2.7			2.6			—
Population (July 1) (in thousands)
	Manitoba			1,137			1,138			1,143			1,146			1,149			0.3
	Canada			29,987			30,248			30,509			30,791			31,111			0.9
Employment (in thousands)				525.6			535.7			542.7			554.4			557.9			1.5
Average Unemployment Rate				6.5	%		5.5	%		5.6	%		4.9	%		5.0	%		—
Average exchange rate (C$ per U.S.$)				1.3844			1.4831			1.4858			1.4852			1.5484			—

(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 2001, goods producing industries accounted for 27.8% of real gross domestic product at basic prices. Manufacturing accounted for 12.9% of real gross domestic product at basic prices, construction for 4.5% and agriculture for 4.3%. The commercial service sector accounted for 52.2% of real gross domestic product at basic prices, and the non-commercial service sector for 20.0%.

The following table sets forth the Real Gross Domestic Product by industry at basic prices and the compound annual growth rates for the years 1997 through 2001.

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


													Compound
													Annual
			Year Ended December 31,										Growth
													Rate
			1997		1998		1999		2000		2001		1997-2001


			(In millions of 1997 dollars)
Goods Producing Industries
	Manufacturing			$3,691		$3,851		$3,850		$3,878		$3,933		1.6	%
	Construction			1,300		1,385		1,388		1,338		1,387		1.6
	Agriculture (2)			1,276		1,443		1,434		1,499		1,310		0.7
	Utilities			1,103		1,071		1,053		1,151		1,181		1.7
	Mining			616		642		531		599		626		0.4
	Forestry			48		55		65		61		61		6.2

Total Goods Producing Industries				8,033		8,446		8,320		8,526		8,497		1.4

Service Producing Industries
	Commercial Services
		Finance, Insurance and Real Estate		2,802		2,858		2,961		3,091		3,205		3.4
		Owner-Occupied Dwellings (3)		2,616		2,649		2,700		2,758		2,807		1.8
		Wholesale Trade		1,597		1,679		1,775		1,830		1,943		5.0
		Transportation and Storage		1,909		1,892		1,964		1,975		1,882		-0.4
		Retail Trade		1,470		1,534		1,602		1,644		1,716		3.9
		Information and Culture		808		852		1,009		1,200		1,329		13.2
		Business Services		994		1,039		1,115		1,195		1,220		5.3
		Accommodation, Food and Beverage		657		667		698		709		689		1.2
		Other Services		1,015		1,077		1,120		1,116		1,159		3.4

	Total Commercial Services			13,868		14,247		14,944		15,518		15,950		3.6

	Non-Commercial Services
		Hospitals and Welfare		2,034		2,086		2,121		2,124		2,149		1.4
		Education		1,484		1,505		1,534		1,583		1,611		2.1
		Federal Administration		958		949		1,016		1,035		1,085		3.2
		Provincial Administration		639		651		694		709		734		3.5
		Local Administration		469		493		524		504		517		2.5

	Total Non-Commercial Services			5,584		5,684		5,889		5,955		6,096		2.2

Total Service Producing Industries				19,450		19,931		20,834		21,472		22,046		3.2

Real Gross Domestic Product at Basic Prices				$27,483		$28,377		$29,154		$29,998		$30,543		2.7

(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) Agriculture also includes fishing, hunting and trapping.

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

Source: Manitoba Bureau of Statistics.

Manufacturing. Manufacturing is the largest sector of the Manitoba economy and is well diversified with the four largest industries accounting for only 53.8% of the value of total shipments in 2001.

The largest industry, food, accounts for 25.3% of total shipments, and produces a broad range of products. The next largest industries are: transportation equipment, primarily buses and

aerospace equipment (14.0% of shipments); machinery, mainly agricultural implements (8.3% of shipments); and fabricated metals (6.3% of shipments). The remaining industries range in size from 6.1% to 1.7% of shipments.

In 2001, manufacturing shipments increased 1.1% due to increased production in the chemical, furniture and printing 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 1997 through 2001.

GROSS VALUE OF MANUFACTURING SHIPMENTS


												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1997		1998		1999		2000		2001		1997-2001


		(In millions of dollars)
Non-durables
	Food		$2,138.7		$2,136.5		$2,469.5		$2,812.3		$2,899.0		7.9	%
	Chemicals		430.1		464.8		507.9		566.2		704.4		13.1
	Plastics		350.0		389.6		452.5		448.8		472.8		7.8
	Printing		429.8		393.1		410.8		424.1		466.5		2.1
	Beverages		202.4		227.2		204.1		215.1		197.1		-0.7
	Other Non-durables		515.6		594.4		592.3		655.6		620.8		4.8
Durables
	Transportation Equipment		1,273.8		1,626.9		1,617.7		1,488.0		1,599.9		5.9
	Machinery		1,406.8		1,347.3		1,050.5		1,031.5		952.3		-9.3
	Fabricated Metals		517.4		543.6		710.6		757.7		721.5		8.7
	Furniture		419.9		484.3		505.9		574.3		667.3		12.3
	Wood		341.3		421.0		476.1		645.7		579.4		14.1
	Clothing		323.2		368.3		364.9		372.3		333.0		0.7
	Electrical and Electronics		151.5		172.6		184.0		241.0		214.9		9.1
	Other Durables		1,226.5		1,203.0		1,109.6		1,111.8		1,036.6		-4.1

Total			$9,727.1		$10,372.5		$10,656.3		$11,344.4		$11,465.6		4.2

Source: Statistics Canada.

In the first eight months of 2002, the value of manufacturing shipments decreased 0.7% compared to the first eight months of 2001. The decrease is principally due to a 23.7% decrease in wood products, a 23.0% decrease in electrical products and a 20.4% decrease in chemical shipments. Overall, eight of fourteen categories of manufacturing shipments reported decreases.

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

In 2001, farm cash receipts increased 16.2%. Crop receipts increased 12.8% due to increased receipts from most major crops primarily reflecting higher prices and production volumes. Livestock receipts increased 16.0% with cattle and calves receipts increasing 23.7% and hog receipts increasing 16.2%. Gains were also recorded in all other types of livestock receipts. Direct payments increased 33.1%.

The following table sets forth farm cash receipts and the compound annual growth rates for the years 1997 through 2001.

FARM CASH RECEIPTS


												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1997		1998		1999		2000		2001		1997-2001


		(In millions of dollars)
Crops
	Wheat		$662.8		$469.1		$493.9		$447.3		$567.0		-3.8	%
	Oilseeds		607.4		715.7		394.4		371.4		400.6		-9.9
	Other Grains		175.7		119.3		107.1		117.8		197.4		3.0
	Vegetables		145.8		160.0		175.1		175.0		193.9		7.4
	Specialty and Forage		115.2		145.4		149.4		170.7		153.9		7.5
	Other (1)		19.3		34.6		94.8		36.1		-25.5		—

Total Crops			1,726.1		1,644.2		1,414.6		1,318.4		1,487.2		-3.7

Livestock
	Hogs		467.9		396.4		482.3		676.1		785.5		13.8
	Cattle and Calves		373.8		454.8		462.0		485.7		600.7		12.6
	Dairy		140.4		145.9		152.3		154.0		158.0		3.0
	Poultry and Eggs		121.5		123.1		126.4		143.8		152.7		5.9
	Other Livestock		104.4		105.2		105.5		109.3		122.5		4.1

Total Livestock			1,208.0		1,225.4		1,328.5		1,568.9		1,819.4		10.8

Direct Payments			142.0		92.1		216.0		287.1		382.1		28.1

Total			$3,076.1		$2,961.7		$2,959.1		$3,174.4		$3,688.7		4.6

Net Cash Income (2)			$757.7		$606.1		$614.2		$643.3		$1,021.3		7.7

(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 are estimated at $108.8 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 1995, subsidies for grain transportation under the Western Grain Transportation Act were eliminated. This has increased the cost to the farmer of shipping grain produced in the Province but is also resulting in changes in Manitoba agriculture such as a different mix of production and more value added locally. In connection with the termination of the subsidies, Manitoba agricultural landowners received approximately $250 million in one-time compensation payments in 1996 and 1997. These one-time payments are not included in farm cash receipts. In 1997, there were additional one-time compensation payments to farmers who rent land of approximately $59 million, which are included in cash receipts.

In the first six months of 2002, farm cash receipts decreased 10.2% over the same period in 2001. Crop cash receipts decreased 5.9%, primarily due to lower production volumes, with the decreases occurring across all the major crop categories except specialty and forage crops. Livestock cash receipts decreased 3.1% with hogs, and cattle and calves decreasing 5.1% and 5.3%, respectively. Direct Payments decreased $117.6 million or 57.3%.

In 2002, crop production volumes are expected to be average, although, stronger prices should lead to higher production values. The drought conditions that affected large parts of the North American plains did not affect Manitoba. The value of livestock production in Manitoba is expected to remain stable after several years of strong growth in hogs and cattle and calves.

Minerals. The principal metals produced in Manitoba are nickel, zinc, copper, and gold. Other metals include cobalt, 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 2001, the total value of mineral production in Manitoba decreased 15.1% to $1,048 million. The value of metal production decreased 16.7% in 2001 as a result of slightly lower production volumes and a significant decline in the price of nickel. Nickel accounted for almost 40% of the total value of mineral production in 2001. The value of petroleum production decreased 11.9%, reflecting lower prices, while the value of industrial mineral production decreased 1.7%.

The following table sets forth the gross value of mineral production and the compound annual growth rates for the years 1997 through 2001.

GROSS VALUE OF MINERAL PRODUCTION


												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1997		1998		1999		2000		2001		1997-2001


		(In millions of dollars)
Metals
	Nickel		$442.0		$341.7		$277.1		$561.6		$413.1		-1.7	%
	Zinc		148.5		142.1		139.0		133.8		131.2		-3.0
	Copper		165.3		121.8		122.4		129.9		122.7		-7.2
	Gold		120.6		118.1		111.4		95.0		89.8		-7.1
	Other Metals		64.5		84.7		78.0		68.9		67.1		1.0

Total Metals			940.9		808.4		727.9		989.3		823.9		-3.3
Petroleum			105.1		73.9		96.6		165.3		145.7		8.5
Industrial Minerals			79.6		84.7		82.7		79.5		78.1		-0.5

Total			$1,125.7		$967.1		$907.1		$1,234.1		$1,047.7		-1.8

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

Overall mining values are expected to remain stable in 2002. The Ruttan Lake mine was closed in the spring of 2002 and gold production is expected to decline by approximately 5%; however, increased production, at other mines particularly copper and zinc production, should offset these declines. The Bissett gold mine discontinued production in September, 2001, and remains in a care and maintenance mode.

Services. The service sector comprises a wide range of activities including transportation, finance, trade, tourism and personal services. From 1997 through 2001, commercial service industries accounted for 48.3% of average total employment in Manitoba, and non-commercial (primarily publicly funded) services accounted for 25.3%.

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, The Great-West Life Assurance Co.

Manitoba’s central location, low-cost office space and multilingual labor force have contributed to the rapid 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, one of the largest media companies in Canada.

Winnipeg serves as a regional shopping center for all of southern Manitoba. In 2001, retail sales in Manitoba increased 5.7% to $9.9 billion. In the first eight months of 2002, retail sales increased 8.2% compared to the same period of 2001.

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 2001, estimated tourism expenditures by both residents of Manitoba and visitors increased by 1.5% to $1,146 million.


Merchandise Exports

In 2001, total merchandise exports amounted to $20.9 billion, an increase of 3.1% compared to 2000, and were equal to 57.7% of GDP at market prices. Foreign countries accounted for 44.6% of merchandise exports and other Canadian provinces and territories accounted for the balance. In 2001, of the total foreign merchandise exports, 79.9% were to the United States, 10.8% to Asia and 4.1% to Europe.

Over the five years 1997 to 2001, exports to the United States increased by 38.2% (representing a compound annual growth rate of 8.4%) and exports to all other countries decreased by 2.9% (representing a compound annual growth rate of - -0.7%). International trade agreements and changes in currency exchange rates have had a positive impact on exports over this period.

The following table sets forth foreign exports by commodity and the compound annual growth rates for the years 1997 through 2001.

FOREIGN EXPORTS BY COMMODITY (1)


												Compound
												Annual
		Year Ended December 31,										Growth
												Rate
		1997		1998		1999		2000		2001		1997-2001


		(In millions of dollars)
Manufacturing
	Transportation Equipment		$749.7		$1,048.1		$1,229.6		$1,052.9		$1,139.7		11.0	%
	Food		665.0		1,040.5		834.2		842.0		974.1		10.0
	Primary Metals		551.5		716.0		608.1		745.8		803.5		9.9
	Machinery		766.1		718.4		503.9		584.8		535.9		-8.5
	Wood		266.8		351.8		505.6		540.8		531.4		18.8
	Chemicals		131.1		232.0		333.6		359.2		418.1		33.6
	Electrical and Electronic		296.5		303.7		235.7		274.7		273.8		-2.0
	Paper and Allied		237.4		236.2		240.9		268.6		254.9		1.8
	Plastics		109.8		137.4		170.0		178.5		210.5		17.7
	Furniture and Fixtures		132.1		131.1		128.0		158.2		171.5		6.7
	Printing and Publishing		65.3		92.9		101.4		124.8		165.6		26.2
	Clothing and Textiles		117.0		136.5		157.7		193.2		156.5		7.5
	Fabricated Metals		63.8		76.6		72.0		95.1		126.1		18.6
	Other		191.0		183.6		227.0		340.2		245.7		6.5

Total Manufacturing			4,343.2		5,404.9		5,347.6		5,758.7		6,007.3		8.4

Agriculture
	Wheat		775.1		456.1		458.9		521.3		537.3		-8.8
	Oilseeds		498.8		673.2		509.3		402.5		440.0		-3.1
	Cattle		222.0		238.4		176.8		188.3		257.7		3.8
	Hogs		164.0		155.8		165.3		207.6		247.5		10.8
	Vegetables		115.6		100.2		124.5		125.7		166.4		9.5
	Other Grains		216.9		119.6		115.5		134.8		154.2		-8.2
	Other Agriculture		26.7		32.0		34.6		35.7		43.2		12.8

Total Agriculture			2,019.2		1,775.2		1,585.3		1,615.8		1,846.2		-2.2

Electricity			309.8		356.2		343.0		442.7		478.2		11.5
Other Primary			40.8		43.2		45.4		43.9		50.4		5.4
Oil Trans Shipment			438.4		311.2		504.9		596.0		664.1		10.9
Other			162.6		177.9		222.6		256.8		267.7		13.3

Total			$7,313.9		$8,068.5		$8,049.5		$8,713.9		$9,314.0		6.2

(1) Most export data, except for some principal grains, are based on port-of-exit information; consequently, data for many categories do not reflect the true value of provincial foreign exports. The above data for 2001 include two items that do not truly reflect Manitoba exports. The value of nickel exports is $337.3 million. This does not include an estimated $37.9 million of nickel, which was exported through Ontario in that year. Oil Trans Shipment represents crude oil production that originated in Alberta and Saskatchewan and was shipped through the Province.

Source: Statistics Canada.

Total foreign exports for the first eight months of 2002 were down 2.4% compared to the first eight months of 2001. On a year-to-date basis, exports to the United States have increased by 1.3% while exports to other countries have decreased by 17.6%.

Capital Investment

In 2001, capital investment increased 3.0%. Capital investment grew in the utilities; public administration; transportation and storage; education services and finance and insurance sectors.

Decreases occurred in retail trade; real estate; health care and social services; and manufacturing sectors. The Statistics Canada survey of investment intentions published in July 2002 indicates that capital investment in 2002 is expected to increase by 2.4%. Private capital is expected to increase 1.7% and public investment to increase 4.5%. Significant increases are expected to occur in mining; other services; retail trade; public administration; and housing. Significant decreases are expected to occur in education; professional and scientific; wholesale trade; and manufacturing.

The following table sets forth categories of capital investment and the compound annual growth rates for the years 1997 through 2001.

CAPITAL INVESTMENT


											Compound
											Annual
	Year Ended December 31,										Growth
											Rate
	1997		1998		1999		2000		2001		1997-2001


	(In millions of dollars)
Housing		$808.2		$865.5		$869.5		$858.0		$882.0		2.2	%
Public Administration		404.5		420.2		575.6		522.5		612.6		10.9
Manufacturing		673.5		584.2		549.1		634.7		589.1		-3.3
Utilities		357.1		379.0		418.2		397.6		508.7		9.2
Transportation and Storage		527.3		681.8		657.4		375.0		406.4		-6.3
Finance and Insurance		270.8		269.6		306.7		361.3		388.0		9.4
Agriculture		442.5		435.8		319.7		312.7		313.8		-8.2
Minerals		231.4		154.2		128.4		236.0		234.6		0.3
Real Estate		98.7		151.0		225.9		230.0		187.1		17.3
Retail Trade		138.5		155.7		154.6		237.0		177.6		6.4
Health Care and Social Services		80.5		87.1		153.7		166.4		151.8		17.2
Wholesale Trade		164.1		172.7		191.5		145.2		143.3		-3.3
Education		79.6		94.5		114.2		121.8		131.6		13.4
Construction		109.8		136.8		109.9		102.2		108.3		-0.3
Professional and Scientific		132.7		107.3		64.3		114.2		108.1		-5.0
Other		520.0		456.9		398.5		366.7		394.4		-6.7

Total		$5,039.2		$5,152.3		$5,237.2		$5,181.3		$5,337.4		1.4

Private		$3,940.3		$4,083.0		$3,847.2		$3,870.0		$3,884.9		-0.4
Public		1,098.9		1,069.3		1,390.0		1,311.3		1,452.4		7.2

Total		$5,039.2		$5,152.3		$5,237.2		$5,181.3		$5,337.4		1.4

Source: Statistics Canada.

Labor Force

In 2001, employment increased by 0.6% with growth occurring in information, culture and recreation; wholesale and retail trade; management, administrative and other support services; transportation and warehousing; public administration; forestry, fishing and mining; and educational services. There was no change in manufacturing employment. Declines were recorded in utilities; agriculture; other services; construction; finance, insurance and real estate; professional, scientific and technical services; health and social assistance; and accommodation and food services. In 2001, the average unemployment rate in Manitoba was 5.0%, the second lowest of any province in Canada and significantly lower than Canada’s rate of 7.2%.

The following table sets forth selected labor force statistics for Manitoba and Canada for the years 1997 through 2001.

LABOR FORCE



	Annual Averages

	1997		1998		1999		2000		2001


	(In thousands unless otherwise
	indicated)
Labor Force		562.0		566.8		574.8		583.2		587.1
Employment		525.6		535.7		542.7		554.4		557.9
Participation Rate		66.6		67.0		67.5		67.9		68.1
Participation Rate (Canada)		64.9		65.1		65.6		65.9		66.0
Unemployment Rate		6.5		5.5		5.6		4.9		5.0
Unemployment Rate (Canada)		9.1		8.3		7.6		6.8		7.2

Source: Statistics Canada.

In the first nine months of 2002, seasonally adjusted employment in Manitoba increased 1.8% compared to the same period for 2001, reaching 565,000. Employment increases were recorded in information, culture and recreation; agriculture; education and health services; wholesale and retail trade; accommodation and other services; public administration; professional and administrative services; and forestry, fishing and mining. Employment was unchanged in utilities. Declines were recorded in construction; transportation and warehousing; finance, insurance and real estate; and manufacturing.

In the first nine months of 2002, the seasonally adjusted unemployment rate in Manitoba averaged 5.2%, up from 5.1% in the same period in 2001. In the first nine months of 2002, the seasonally adjusted unemployment rate in Canada averaged 7.7%. Manitoba’s seasonally adjusted labor force participation rate over the first nine months of 2002 averaged 69.0%, up from 67.9% in the same period of 2001.

Energy

Refined petroleum and natural gas provided 37.5% and 35.2%, respectively, of the Province’s total energy needs in 2000, while 24.6% 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.”

GOVERNMENT FINANCES

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

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

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

The revenues and expenses of the Provincial Government are recorded in the financial statements for the Consolidated Fund on the following basis. These accounting policies have been developed and are applied in accordance with the provisions of the provincial Financial Administration Act.


	a)	Revenue — All 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. Government transfers other than entitlements are recognized as revenue in the period during which the transaction is authorized and any eligibility criteria are met. Entitlements from the Government of Canada are recorded on a cash basis except for accruals of prior year adjustments determined before June 30 each year. 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.


	b)	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.


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

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

The accounts of the Consolidated Fund of the Province include investments in, and loans, advances and grants to, Crown organizations and government enterprises, but in general do not

include the profits or losses of such entities. Each of these entities maintains its own accounting records, which are audited annually. For information relating to loans and advances to Crown organizations and government enterprises, see “Crown Organizations and Government Enterprises.”

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

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

The Provincial Government prepares a budget for each fiscal year, which estimates revenue and expenses. The Fiscal Stabilization Fund was established to cushion fluctuations in provincial revenue and provide a more stable basis for fiscal decisions. The Fund is also available for special initiatives. The Fiscal Stabilization Fund earns interest. Transfers to and from the Fiscal Stabilization Fund are determined by the Minister of Finance, subject to approval by the Lieutenant Governor in Council. At March 31, 2002, the Fiscal Stabilization Fund had $247.2 million in liquid assets.

The Balanced Budget, Debt Repayment and Taxpayer Accountability Act (the “Balanced Budget Act”) requires the total expenses of the Province (both current and capital) to be no greater than revenue (including transfers from the Fiscal Stabilization Fund and transfers to the Debt Retirement Fund). Exceptions are allowed only for war, disaster or a single year decline in revenue of 5.0% or more.

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 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.

The Balanced Budget Act, the Fiscal Stabilization Fund Act and the Financial Administration Act have been amended to provide for fiscal years beginning in the fiscal year ended March 31, 2001 that:


	•	transfers to and from the Fiscal Stabilization Fund and the Debt Retirement Fund may not be recorded as expenditure or revenue but are recorded as transfers;

	•	debt repayments in the Debt Retirement Fund are broadened to include the pension liability of the government; and

	•	the 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.

Total Operating Fund expenses and transfers to the Debt Retirement Fund for the year ended March 31, 2002 were $6,833.5 million, down $19.5 million from the budget estimate of $6,853.0 million, reflecting higher than anticipated health care, offset by lower Public Debt costs. Total Operating Fund Revenue and a transfer of $150 million from the Fiscal Stabilization Fund, were $6,896.8 million or $33.4 million higher than the budget estimate of $6,863.4, reflecting an increased transfer from the Fiscal Stabilization Fund offset by lower than anticipated personal and corporate income taxes and federal transfers. The reported budgetary surplus for the year ended March 31, 2002 was $63.3 million as compared to an estimated surplus of $10.4 million.

The budget papers presented in April 2002, had contemplated a distribution of retained earnings from Manitoba Hydro of $150 million for the year ended March 31, 2002. Because the legislative authority for this transfer did not take effect until August 2002, the distribution was not reflected in the 2001/02 fiscal year results. In lieu of this distribution, $150 million was transferred from the Fiscal Stabilization Fund to the Operating Fund in that fiscal year.

The budget for the fiscal year ending March 31, 2003 was presented to the Legislature on April 22, 2002. The budget estimate in the following table reflects the $150 million transfer of retained earnings from Manitoba Hydro, to the Province, and the transfer of that amount back to the Fiscal Stabilization Fund. An additional transfer from the Fiscal Stabilization Fund in the 2002/2003 fiscal year is expected in the amount of $93.0 million.

The following table sets forth the transactions of the Operating Fund for the four fiscal years ended March 31, 2002 and the budget estimate for the fiscal year ending March 31, 2003.

STATEMENT OF OPERATING FUND TRANSACTIONS

									��

			Year Ended March 31,													Budget
																Estimate
			1999			2000				2001			2002			2003


			(In millions of dollars)
Revenue (1)
	Federal Transfers			$1,559.6			$2,073.1				$2,091.4			$2,206.4			$2,362.3
	Individual and Corporation Income Taxes			2,022.4			1,918.1				2,200.8			1,965.7			1,828.8
	Other Corporation Taxes			383.1			399.5				404.7			420.0			414.7
	Sales Taxes			938.0			974.6				1,000.8			1,031.5			1,098.1
	Luxury Taxes			491.8			493.9				518.5			549.9			597.0
	Gasoline and Motive Fuel Taxes			224.4			218.4				223.5			222.9			225.3
	Natural Resources Revenue			86.9			93.6				138.6			155.7			151.9
	Manitoba Hydro Retained Earnings Distribution			—			—				—			—			75.0
	Other Revenue			175.8			166.6				173.7			194.7			188.2

		Total Revenue Before Transfer from Fiscal Stabilization Fund		5,882.0			6,337.8				6,752.0			6,746.8			6,941.3

Expenses (1)
	Health and Community Services			$2,728.9			$3,067.7				$3,302.3			$3,504.0			$3,639.3
	Education			1,120.5			1,187.4				1,265.9			1,288.3			1,341.4
	Economic and Resource Development			653.7			793.6				718.2			640.9			775.9
	Consumer Services, Public Protection and Other Government Services			553.3			634.8				463.3			520.7			494.1
	Manitoba Tax Credit Programs			178.0			177.7				218.1			233.3			231.2
	Direct Local Government Assistance			137.5			110.0				135.8			134.6			141.9
	Allowance for Losses			(0.1	)		0.2				0.9			1.6			0.8
	Public Debt			514.8			465.3				510.7			414.1			368.3
	Less: Year-End Savings (2)			—			—				—			—			(65.0	)

		Total Expenses Before Transfer to Debt Retirement Fund		$5,886.6			$6,436.7				$6,615.2			$6,737.5			$6,927.9

Operating Fund Surplus/(Deficit) Before the balance of The Manitoba Hydro Retained Earnings Distribution & Transfers				(4.6	)		(98.9	)			136.8			9.3			13.4
Manitoba Hydro Retained Earnings Distribution (3)				—			—				—			—			150.0
Transfer Manitoba Hydro Retained Earnings Distribution to Fiscal Stabilization Fund (3)				—			—				—			—			(150.0	)
Transfer from Fiscal Stabilization Fund				185.7			184.7				—			150.0			93.0
Transfer to Debt Retirement Fund				(150.0	)		(75.0	)			(96.0	)		(96.0	)		(96.0	)

Operating Fund Surplus (4)(5)				$31.1			$10.8				$40.8			$63.3			$10.4


Financing Requirements
Refinancing
	For General Government Programs		$1,299.7
	For The Manitoba Hydro-Electric Board		462.9
	For Other Self-Sustaining Programs		38.6
New Cash Requirements
	For General Government Capital Investments		—
	For The Manitoba Hydro-Electric Board		309.0
	For Other Self-Sustaining Programs		150.0

		Total Provincial Financing Requirement	$2,260.2

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

(2) Anticipated unexpended portion of budgeted amount.

(3) The 2002 Budget Papers identified special export profits distribution in the amount of $150 million from The Manitoba Hydro-Electric Board in the fiscal year 2001/02. Due to the fact that the legislative authority was not proclaimed until August 2002, the distribution was not reflected in the 2001/02 fiscal year. In lieu of this distribution, $150 million was transferred from the Fiscal Stabilization Fund to the Operating Fund in the fiscal year 2001/02. The Budget Estimate noted above for the fiscal year 2002/03 reflects The Manitoba Hydro Retained Earnings distribution to the Province and the funds being transferred back to the Fiscal Stabilization Fund.

(4) Volume 1 of the Public Accounts for the year ended March 31, 2002 (is an exhibit to the Province’s Annual Report on Form 18-K, which exhibit is incorporated by reference) reflects both the Summary Financial Statements of the Government and the transactions and balances of the Operating Fund and Special Funds of the Province of Manitoba. The Summary Financial Statements of the Government of the Province of Manitoba are designed to reflect the Government’s management of public financial affairs and resources as a whole. In the opinion of the Auditor General, the financial statements for the year ended March 31, 2002 have been fairly presented in accordance with the accounting policies disclosed in the notes to the financial statements. Summary Financial Statements are reflected in the “Tables of Supplementary Information — Tables III and IV.”

(5) The Operating and Special Funds financial statements do not include the Government’s pension liabilities. If the pension liabilities were included, the liabilities and accumulated deficit of the Operating and Special Funds as at March 31, 2002 would increase by $3.2 billion.

Revenue

Provincial Source Revenues. Of its Total Revenue Before Transfer from Fiscal Stabilization Fund budgeted for the fiscal year ending March 31, 2003, the Province expects to derive $4,579.0 million or about 66.0% 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. Until 1999, the Province employed a three tax system: a basic income tax (calculated as a percentage of basic Federal income tax), a net income tax and a net income surtax. For many tax-filers, tax owing was reduced by a low-income tax reduction and several tax credits. Under new Federal-Provincial arrangements, the Province now has more latitude in the design of its income tax system. The Province has replaced its three tax system with a single tax with brackets and rates applied directly to taxable income. These changes were partially implemented for the 2000 tax year. The full system was implemented on January 1, 2001. These changes were accompanied by increased tax credits, which are 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, 2003 is budgeted at $1,682.3 million, net of provincial-municipal revenue sharing arrangements under which the Province allocates a portion of its gross personal income tax to local governments.

The Province is also 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 $300,000) was reduced from 6% to 5% effective January 1, 2002. The rate for large businesses was reduced from 17% of taxable income to 16.5% on January 1, 2002 and will be reduced by further reductions of 0.5% each January 1 thereafter until it reaches 15% on January 1, 2005. Corporation income tax revenue for the fiscal year ending March 31, 2003 is budgeted at $146.5 million, net of provincial-municipal revenue sharing arrangements under which the Province allocates 1.0 percentage point of its corporation income tax 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, 2003 is budgeted at $1,032.5 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, 2003, the revenues from gasoline and motive fuel taxes are budgeted at $225.3 million. There is also a tobacco tax of 14.5¢ per cigarette and 13.2¢ per gram of loose tobacco. Total tobacco tax revenue for the fiscal year ending March 31, 2003 is budgeted at $178.0 million.

A levy for financing health and post-secondary education is applied to total compensation paid to employees by Manitoba employers. Employers with annual payrolls under $1 million are exempt and those with payrolls between $1 million and $2 million are subject to reduced rates. The tax rate on taxable payroll is 2.15%. For the fiscal year ending March 31, 2003, the levy is budgeted to yield $243.3 million.

Federal Government Transfers. Transfer payments from the Federal Government are budgeted to provide $2,362.3 million, or approximately 34.0% of the Province’s Total Revenue Before Transfer from Fiscal Stabilization Fund budgeted in the fiscal year ending March 31, 2003. Unconditional transfers, primarily receipts under a Federally funded provincial revenue equalization formula and cash payments under the Canada Health and Social Transfer, account for approximately 32.2% 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 $1,481.3 million from Federal equalization payments in the fiscal year ending March 31, 2003.

The current Canada Health and Social Transfer Arrangements within the Federal Act provide for federal assistance in respect of social programs through transfers to the Provincial governments of income taxing authority and cash payments. The amount of Federal assistance does not bear a direct relationship to the program costs of the Province, but rather is calculated on the basis of per capita entitlements. The cash component of these arrangements is budgeted at $728.8 million for Manitoba for the fiscal year ending March 31, 2003. On October 20, 2000, the Federal Government passed an Act to increase payments under the Canada Health and Social Transfer. In the October 1, 2002 Throne Speech, the Federal Government indicated that there would be increased payments for health care transfers forthcoming in the 2003 Federal Budget.

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 will recover a further amount for the 2001 tax year currently estimated at $112 million. In September 2002, the Federal government announced a settlement with the provinces affected by this error and an amendment to equalization regulations that will result in Manitoba receiving an additional estimated $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 receives a $140 million transitional payment in 2002/03. This payment will offset a similar amount which had been budgeted as equalization revenue in the Budget Estimate 2003 and which will not be received.

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.

Expenditure

Health and Community Services. For the fiscal year ending March 31, 2003, expenditure on Health and Community Services is budgeted at $3,639.3 million, an increase of 3.9% over the prior year. This is the largest single expenditure category and represents 51.8% 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 $2,770.9 million for the fiscal year ending March 31, 2003, an increase of 3.8% over the prior year.

Also included in this category is $839.0 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, 2003 is budgeted at $1,341.4 million, an increase of 4.1% over the prior year, and represents 19.1% of Manitoba’s total budgeted expenditure and transfer to Debt Retirement Fund. The major portion of this expenditure, amounting to $792 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 $411.7 million for the fiscal year ending March 31, 2003.

Economic and Resource Development. Expenditure on economic and resource development is budgeted at $775.9 million for the fiscal year ending March 31, 2003, an increase of 21.1% from the prior year, and represents 11.0% of Manitoba’s total budgeted expenditure and transfer to Debt Retirement Fund. The largest item in this category is Transportation and Government Services, amounting to $341.2 million.

Consumer Services, Public Protection and Other Government Services. Expenditure for Consumer Services, Public Protection and Other Government Services is budgeted at $494.1 million, a decrease of 5.1% over the prior year.

Other. The Province also provides property and cost-of-living tax credits to residents of Manitoba, budgeted at $231.2 million for the fiscal year ending March 31, 2003.

Expenditure for Provincial assistance to local governments is budgeted at $141.9 million for the fiscal year ending March 31, 2003 and includes $72.0 million for grants to the City of Winnipeg and $14.1 million for grants in lieu of taxes to municipalities.

SUMMARY FINANCIAL STATEMENTS

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

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


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

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

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

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

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

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 will transfer up to $288 million of retained earnings to the Province for the fiscal years ending 2003 and 2004. Loans, advances, investments and grants are made as required for the operations of the organizations pursuant to appropriations in the Provincial Budget or through specific enactment by the Legislative Assembly.

A valuation allowance is provided in the accounts of the Province for decreases in the value of loans, advances and investments 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, 2002, was $125.1 million in respect of the Province’s total investment in its Crown organizations in the amount of $8,264.2 million at such date.

The following table summarizes the loans and advances of the Province’s principal Crown organizations for the years 1998 through 2002 and the allowance for losses on realization of assets as at March 31, 2002:

LOANS AND ADVANCES TO

CROWN ORGANIZATIONS AND GOVERNMENT ENTERPRISES (1)



	As at March 31,

											2002
											Valuation
	1998		1999		2000		2001		2002		Allowance


					(In thousands of dollars)
The Manitoba Hydro- Electric Board (2)		$5,646,724		$6,202,135		$6,854,360		$7,017,104		$7,221,434		$—
The Manitoba Housing and Renewal Corporation		392,275		386,873		370,077		355,007		351,968		17,307
The Manitoba Agricultural Credit Corporation		213,157		258,993		310,811		314,545		326,423		28,804
The Manitoba Lotteries Corporation (3)		—		—		—		170,000		170,000		—
Manitoba Development Corporation		78,839		80,633		87,477		88,168		104,378		49,317
Other		97,222		192,469		92,236		84,809		90,022		29,706

Total		$6,428,217		$7,121,103		$7,714,961		$8,029,633		$8,264,225		$125,134

(1) Crown Organizations and Government Enterprises also have debt not guaranteed by the Province which consists of $188.4 million held by Canada Mortgage and Housing Corporation, an agency of the Federal government, $36.0 million held by various First Nation Bands and $2.4 million of assumed mortgages on existing property.

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

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

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, 2002, the Corporation had total assets of $625.1 million represented by $315.2 million of projects completed or under construction, owned land held for development and/or sale having a book value of $13 million, loans and mortgages receivable of $175.4 million and other assets of $121.5 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, 2002, the Corporation had total assets of $315.0 million, of which $275.8 million represented receivables secured by first mortgages on farmland and buildings. For the fiscal year ended March 31, 2002, the Corporation’s operating deficit was $1.4 million, after a Provincial operating grant of $4.6 million. As at March 31, 2002, the accumulated deficit of the Corporation was $26.1 million, primarily representing an allowance for doubtful accounts which the Province will fund as accounts are written off.

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 1998 through 2002.

DIRECT FUNDED DEBT OF THE PROVINCE (1)



		As at March 31,

		1998		1999		2000		2001		2002 (2)


				(In thousands of dollars)
Direct Funded Debt Payable in:
	Canadian Dollars (3)		$8,575,028		$10,175,179		$11,115,797		$11,548,212		$11,807,490
	Issues swapped to Canadian Dollars		2,746,411		2,045,427		2,852,563		2,624,374		3,221,628
	U.S. Dollars		4,895,424		5,517,267		5,087,250		4,765,523		3,734,567
	Issues swapped to U.S. Dollars		1,363,002		880,384		574,016		1,015,640		1,555,051

Total Direct Funded Debt (4)			17,579,865		18,618,257		19,629,626		19,953,749		20,318,736
	Less: Sinking Funds		5,053,335		5,821,697		6,411,147		6,188,797		6,485,514

	Net Direct Funded Debt		$12,526,530		$12,796,560		$13,218,479		$13,764,952		$13,833,222

Raised for the purpose of:
	General Government Programs (5)		$6,763,278		$6,773,800		$6,718,334		$6,788,756		$6,643,283
	The Manitoba Hydro-Electric Board		4,784,110		5,083,853		5,566,339		5,670,440		5,701,237
	Other		979,142		938,907		933,806		1,305,756		1,488,702

	Net Direct Funded Debt		$12,526,530		$12,796,560		$13,218,479		$13,764,952		$13,833,222

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

(2) Subsequent to March 31, 2002, the Province issued funded debt of $1,254 million in Canadian dollars and U.S. $170 million, 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, 2001 and 2002, the amounts of such debentures were $1,395 million and $1,260 million, respectively.

(4) For the fiscal year ending March 31, 2003, the gross interest expense for the Province’s direct funded debt is estimated to be $1,254 million, comprised of $657 million for general provincial programs (before deduction of interest income of $242 million) and $597 million in respect of debt designated by the Lieutenant Governor in Council as “self-sustaining,” which is required to be serviced out of funds generated by the activity financed.

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

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

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 1998 through 2002.

GUARANTEED DEBT OF THE PROVINCE (1)



			As at March 31,

			1998		1999		2000		2001		2002 (2)


					(In thousands of dollars)
Guaranteed Debt Payable in:
	Canadian Dollars			$507,565		$479,632		$421,219		$416,102		$595,190
	U.S. Dollars			532,500		296,709		—		—		—

		Total Guaranteed Debt		1,040,065		776,341		421,219		416,102		595,190
		Less: Sinking Funds and Other Related Trust Funds		248,916		175,118		180,473		25,084		25,447

	Net Guaranteed Debt (3)			$791,149		$601,223		$240,746		$391,018		$569,743

Issued by:
	The Manitoba Hydro-Electric Board			$784,689		$592,600		$231,699		$382,086		$562,014
	Other			6,460		8,623		9,047		8,932		7,729

		Net Guaranteed Debt (3)		$791,149		$601,223		$240,746		$391,018		$569,743

(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) Subsequent to March 31, 2002, Manitoba Hydro issued debt which was guaranteed in the amount of $395.1 million in Canadian dollars which was issued to finance maturing issues and fund capital expenditures.

(3) The table does not include contingent obligations in the amount of $16.5 million as at March 31, 2002, comprised of $0.6 million of mortgages, and $15.9 million of bank lines of credit.

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

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, 2002:

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		$509		$ —		$509		$ —		$509
2003		2,731		524		3,255		1,597		1,658
2004		1,697		735		2,432		907		1,525
2005		1,420		77		1,497		305		1,192
2006		796		322		1,118		112		1,006

		7,153		1,658		8,811		2,921		5,890
2007-2011		4,281		1,898		6,179		1,596		4,583
2012-2021		2,604		1,256		3,860		1,539		2,321
2022-2042		1,586		478		2,064		455		1,609

		$15,624		$5,290		$20,914		$6,511		$14,403

(1) The table does not include contingent obligations in the amount of $16.5 million as at March 31, 2002, comprised of $0.6 million of mortgages, and $15.9 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.$3.32 billion) is stated at the Canadian dollar equivalent at March 31, 2002.

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, 2002, was $226.5 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, 2002 amounted to $1,267 million, including $534 million of accounts payable, $265 million of accrued interest and $468 million of other accrued charges. This unfunded debt was offset by current assets of the Province in the amount of $839 million, represented by $303 million of March 2002 tax revenue receivables, $66 million of other receivables, $81 million of interest receivable and $262 million of accounts receivable from the Federal and other governments and $127 million in cash and equivalents.

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 1998 through 2002.

CONSOLIDATED FUNDED DEBT OF THE MANITOBA PUBLIC SECTOR



			As at March 31,

			1998		1999		2000		2001		2002


			(In millions of dollars)
Issued for the purpose of:
	General Government Programs			$9,305		$9,733		$9,981		$9,955		$10,147
	The Manitoba Hydro-Electric Board			6,719		7,009		7,503		7,655		7,845
	Other Crown Organizations			2,809		2,872		2,989		2,957		2,750
	Municipalities and their Enterprises			1,240		1,199		1,276		1,175		1,164
	Schools and Universities			352		376		386		400		426
	Hospitals and Associated Institutions			526		527		591		681		722

		Total Public Sector Debt		20,951		21,716		22,726		22,823		23,054
	Less: Accumulated Sinking Funds			5,639		6,367		7,030		6,674		7,019

		Net Public Sector Debt		$15,312		$15,349		$15,696		$16,149		$16,035

Consisting of:
	Direct Debt of the Province (1)			$17,579		$18,619		$19,630		$19,954		$20,319
	Less: Amount Provided to Municipalities, Universities and Hospitals			33		24		16		231		399
	Guaranteed Debt of the Province (1)			1,040		776		421		416		595
	Non-Guaranteed Debt of Crown Organizations			247		243		438		428		227
	Municipalities and their Enterprises			1,240		1,199		1,276		1,175		1,164
	Schools and Universities			352		376		386		400		426
	Hospitals and Associated Institutions			526		527		591		681		722

Total Public Sector Debt				20,951		21,716		22,726		22,823		23,054
	Less: Accumulated Sinking Funds			5,639		6,367		7,030		6,674		7,019

		Net Public Sector Debt		$15,312		$15,349		$15,696		$16,149		$16,035

(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.

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 1998 through 2002, including per capita data based upon population at July 1 of the preceding calendar year:

PUBLIC SECTOR DEBT INFORMATION



		As at March 31,

		1998			1999			2000			2001			2002

Total Net Consolidated Funded Debt of the Manitoba
	Public Sector (in millions)		$15,312			$15,349			$15,696			$16,149			$16,035
	Per Capita		13,455			13,429			13,696			14,055			13,931
	As a Percent of Personal Income		60.9	%		58.3	%		58.0	%		56.2	%		53.7	%
	As a Percent of Gross Domestic Product		51.3			49.7			49.4			48.0			45.8
Total Net Direct Funded Debt of the Province (in millions)			$12,527			$12,797			$13,218			$13,765			$13,833
	Per Capita		11,008			11,196			11,534			11,980			12,018
	As a Percent of Personal Income		49.9	%		48.6	%		48.8	%		47.9	%		46.3	%
	As a Percent of Gross Domestic Product		42.0			41.5			41.6			40.9			39.5
Net Debt Issued for General Government Programs (in millions)			$6,763			$6,774			$6,718			$6,798			$6,651
	Per Capita		5,943			5,927			5,862			5,916			5,778
	As a Percent of Personal Income		26.9	%		25.7	%		24.8	%		23.7	%		22.3	%
	As a Percent of Gross Domestic Product		22.7			21.9			21.1			20.2			19.0
Net Cost of Servicing General Government Program Debt as a Percent of Provincial Revenue			8.9	%		8.5	%		7.1	%		7.6	%		6.1	%

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, 2002 was $29 million ($28 million in 2001).

An actuarial valuation and report of the Government’s liability to the CSSF was determined as at December 31, 1998. 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 $1,389 million as at March 31, 2002 ($1,316 million in 2001).

An actuarial report for TRAF was completed in January 1, 2001 and provides a formula to update the Government’s pension liability, resulting in an actuarial liability of $1,780 million at March 31, 2002 ($1,687 million in 2001).

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.

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 in March 2000 and provides a formula to update the liability on an annual basis. The Government’s liability is calculated to be $31 million at March 31, 2002 ($32 million in 2001).

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



		As at March 31,

		2001		2002


		(In millions of
		dollars)
Civil Service Superannuation Fund:
	Operating Fund		$1,316		$1,389
	Crown Organizations		15		17
Members of Legislative Assembly			32		31
Teachers’ Retirement Allowances Fund			1,687		1,780

Total			$3,050		$3,217

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, 2002 of approximately $422 million ($386 million as at March 31, 2001), which was fully funded. These amounts are not included in the above totals.

THE MANITOBA HYDRO-ELECTRIC BOARD

The Manitoba Hydro-Electric Board (“Manitoba Hydro”) was established in 1949 by an Act of the Legislature of the Province as an agent of the Crown in right 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 249,000 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. Manitoba Hydro distributed $150 million of accumulated retained earnings in August 2002 and will make further payments of up to $75 million in 2002-03 and up to $63 million in 2003-04.

In September 2002, Manitoba Hydro purchased all of the assets and liabilities of Winnipeg Hydro from the City of Winnipeg. The primary financial terms of the purchase are that Manitoba Hydro will receive all generating, transmission, distribution and business assets, incurred net debt obligations related to Winnipeg Hydro of $133 million, 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, and construct a minimum 400,000 square foot office complex in downtown Winnipeg. Winnipeg Hydro operated two hydraulic generating stations with a capability of 143 megawatts and had gross revenue of $127 million and net income of $21 million for the fiscal year ended December 31, 2001.

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

At March 31, 2002, the total installed integrated electric generating capability, in the Province was 5,175,000 kilowatts, of which 5,032,000 kilowatts were operated by Manitoba Hydro and the remaining 143,000 kilowatts were operated by Winnipeg Hydro.

Four isolated communities in northern Manitoba that are too remote to be served from the integrated system are provided with electric service by Manitoba Hydro from local diesel-electric generating stations having a total installed capacity of 9,615 kilowatts.

Of Manitoba Hydro’s total generating capability at March 31, 2002, hydro-electric stations represented 95.2%, thermal-electric (coal) stations 4.6% and diesel-electric stations 0.2%. During the year ended March 31, 2002, 95.7% of the Manitoba integrated system energy input of 33.6 billion kilowatt-hours was provided by hydro-electric generation. The portion of total supply provided by thermal generation was 1.4% and by imports was 2.9%.

Operations

Electrical

As at March 31, 2002, Manitoba Hydro owned and operated 12 hydro-electric generating stations having a total installed electric generating capability of 4,799,300 kilowatts, including five stations with a total capability of 3,891,500 kilowatts located on the Nelson River. Manitoba Hydro also operated two thermal-electric generating stations having a total installed capability of 232,700 kilowatts.

As at March 31, 2002, the high voltage transmission facilities of Manitoba Hydro consisted of approximately 11,562 circuit kilometres, representing a total investment of $672 million.

For purposes of exporting firm energy and for the interchange of power on a short-term basis to provide for economy of operations and system emergencies, Manitoba Hydro maintains interconnections with power facilities in the Provinces of Saskatchewan and Ontario and in the States of North Dakota and Minnesota. Manitoba Hydro’s interconnections with Saskatchewan have a total transfer capability of 450,000 kilowatts and interconnections with Ontario have a capability of 263,000 kilowatts. The interconnections with the United States have a total transfer capability of 2,050,000 kilowatts.

During the fiscal year ended March 31, 2002, Manitoba Hydro sold a total of 29.2 billion kilowatt-hours of electricity, representing an increase of 1.4% from the fiscal year ended March 31, 2001. Scheduled extraprovincial sales accounted for 12.3 billion kilowatt-hours, or 42.1% of total sales in the fiscal year ended March 31, 2002. The only customer in Manitoba accounting for 5% or more of total kilowatt-hours sales was Winnipeg Hydro (5.0%), which is now wholly-owned by Manitoba Hydro.

Net income from electrical operations for the fiscal year ended March 31, 2002 was $221 million, a decrease of $46 million from the previous fiscal year. The reduction to net income was primarily a result of increased finance expense, water rentals and fuel and power purchases partially offset by increased extraprovincial sales.

Net income is anticipated to return to normal historical levels in the current year, as electricity exports were unusually high in the 2001 and 2002 fiscal years due to above average water flows and unusually high export market prices.

Natural Gas

Centra Gas provides natural gas distribution and related energy services to 249,000 customers that are located in nearly 100 communities throughout southern Manitoba. Centra Gas owns a network of transmission (1,590 kilometers) and distribution (6,342 kilometers) mains to meet the natural gas requirements of its customers.

For the year ended March 31, 2002, Centra Gas incurred a net loss of $7 million based on total gas deliveries of 72.2 billion cubic feet. These gas deliveries were comprised of 22.8 billion cubic feet to residential customers, 31.7 billion cubic feet to commercial and industrial customers and 17.7 billion cubic feet of transportation deliveries. The net loss incurred by Centra in 2001-02 was primarily attributable to weather-related reductions in gas usage.

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”). Manitoba Hydro did not seek a rate increase for electricity customers for the 2002/03 fiscal year. As a result, residential rates will have remained unchanged for the last six years and rates for large industrial customers have been held constant for the last eleven years.

In November 2001, the Province of Manitoba passed legislation to equalize Manitoba’s rural and urban electricity rates. The rate decrease to rural customers will reduce electric revenues by approximately $14 million per year.

Centra Gas files quarterly rate applications with the PUB, based on the twelve-month forward price for Western Canadian gas supplies, which are designed to pass through to customers the full impact of gas price changes.

Statistical Information

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



			Year Ended March 31,

			1998			1999			2000			2001			2002

Electricity
Integrated System Installed
Generating Capability (in megawatts)				5,137			5,137			5,116			5,210			5,175
Manitoba Firm Peak Demand (in Megawatts)				3,490			3,559			3,524			3,637			3,760
Manitoba & Winnipeg Hydro Integrated System Electric Energy (in millions of kilowatt-hours)
	Generated			34,060			30,060			30,155			32,697			32,643
	Purchased			942			1,225			870			834			968

				35,002			31,285			31,025			33,531			33,611
	Losses and Internal Use			3,910			3,577			3,471			3,780			3,932

		Total Electric Energy Sales		31,092			27,708			27,554			29,751			29,679

Electric Energy Sales (1) (in millions of kilowatt-hours)
	Manitoba			15,895			16,288			15,777			16,653			16,916
	Extraprovincial			13,567			11,404			10,911			12,154			12,298

		Total Electric Energy Sales		29,462			27,692			26,688			28,807			29,214

Revenue from Sale of Power (in thousands of dollars)
	Manitoba			$738,698			$748,277			$737,230			$781,064			$786,036
	Extraprovincial			296,958			326,200			376,570			479,673			587,893

		Total Revenue from Sale of Power		$1,035,656			$1,074,477			$1,113,800			$1,260,737			$1,373,929

Number of Customers (at end of period)				394,328			398,863			402,023			403,040			405,535
Average Revenue per kilowatt-hour
	Manitoba			4.65	¢		4.59	¢		4.67	¢		4.69	¢		4.65	¢
	Extraprovincial			2.19			2.86			3.45			3.95			4.78
Average Cost per kilowatt-hour of Electric Energy Sold (excluding finance expense)				1.73	¢		2.05	¢		2.13	¢		2.12	¢		2.44	¢
Natural Gas (2)
Gas Deliveries (in billions of cubic feet)
	Residential									18.7			24.7			22.8
	Commercial / Industrial									25.6			34.4			31.7
	Transportation									12.9			17.6			17.7

		Total Gas Deliveries								57.2			76.7			72.2

Number of Customers (at end of period)										245,761			248,074			249,351
Revenue from Sale of Natural Gas (in thousands of dollars)
	Residential									$136,763			$239,969			$224,704
	Commercial / Industrial									129,482			258,672			248,045
	Transportation									1,388			1,836			4,127
	Other									1,074			2,803			2,471

		Total Revenue from the Sale of Natural Gas								$268,707			$503,280			$479,347

Rate Base (in thousands of dollars) (3)										$280,097			$280,097			$280,097
Allowed Rate of Return (3)										9.91	%		9.91	%		9.91	%

(1) Manitoba energy sales are based on the net energy transfer to Winnipeg Hydro and exclude internal energy use. Extraprovincial energy sales 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.

(3) Rate base and rate of return values are based on the last approved figures approved by PUB in 1998.

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

Construction Program

The following table summarizes Manitoba Hydro’s capital expenditure for improvements and expansion of its facilities during the four-year period ended March 31, 2002, 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, 2007.

CAPITAL EXPENDITURE



		Year Ending March 31, (in thousands of dollars)


										Estimated

		1999		2000		2001		2002		2003		2004		2005-2007

Electricity
Generating Plant			$60,387		$63,933		$109,811		$153,070		$105,411		$100,203		$169,489
Major Transmission &
	Stations		94,003		107,025		81,102		95,169		70,660		114,409		344,223
Distribution & Other			177,215		150,880		150,148		171,743		190,805		161,185		472,315
Natural Gas
Distribution & Other			—		7,613		21,121		18,740		23,773		21,800		61,474

			$331,605		$329,451		$362,182		$438,722		$390,649		$397,597		$1,047,501

The estimated capital expenditure of $1,836 million for the five-year period ending March 31, 2007, together with approximately $1,096 million of debt maturities, net of projected sinking fund withdrawals and sinking fund contributions for the same period, total $2,932 million. Manitoba Hydro expects approximately 53% of these requirements will be obtained from internally generated funds. These amounts do not include any of the possible new hydraulic projects discussed below.

In July 2002, commissioning of two natural gas fired combustion turbines (“CT”) with a total capacity of 260 MW was completed. The total capital cost of constructing the CT’s and associated equipment is estimated to be $187 million. The new CT’s allow Manitoba Hydro to optimize the operations of the hydraulic generating stations and provide for increased system reliability during periods of drought.

Manitoba Hydro has five generating stations with a total installed generating capability of 3,892 megawatts along the Nelson River. Manitoba Hydro estimates the total potential hydro-electric generating capacity of the overall Nelson River development to be in excess of 7,500 megawatts.

It is projected that no new major hydraulic generation will be required to serve the Manitoba domestic market and committed export requirements until at least 2021. Manitoba Hydro is currently exploring the feasibility of building a new hydro-electric generating station prior to that date in order to take advantage of export market opportunities. Manitoba Hydro has determined that a new station could be in-service at Wuskwatim by as early as 2009 if a decision to proceed is made in the near future. Such a plant may be built through a joint-venture partnership with First Nations located in the vicinity of the site. Manitoba Hydro has reached non-binding agreements in principle with communities in the vicinity of three possible generating stations,

including Wuskwatim. Discussions with one of these communities have resulted in a non-binding summary of understanding which describes the particular business arrangements of the partnership that would be formed should the project proceed.

As a result of Manitoba Hydro’s generation and transmission activities in the past, a number of communities have experienced adverse impacts. In an effort to provide fair compensation to these communities, Manitoba Hydro has been engaged in discussions to reach agreements in principle and settlement agreements. As of March 31, 2002, Manitoba Hydro has committed $471 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.

Manitoba Hydro is pursuing discussions with The Cross Lake First Nation, the fifth NFA community, in order to determine how best to implement the NFA. In addition, discussions are ongoing to reach concluding arrangements with the remaining communities not covered by the NFA.

MANITOBA INTEGRATED SYSTEM

EXISTING AND POTENTIAL GENERATING STATIONS

EXISTING GENERATING STATIONS


Generating Station	River	Winter Capability

		(in Megawatts)
Jenpeg	Nelson		97
Kelsey	Nelson		211
Kettle	Nelson		1,228
Long Spruce	Nelson		1,008
Limestone	Nelson		1,347
Pine Falls	Winnipeg		87
Great Falls	Winnipeg		130
McArthur Falls	Winnipeg		54
Seven Sisters	Winnipeg		154
Slave Falls (Winnipeg Hydro)	Winnipeg		67
Pointe Du Bois (Winnipeg Hydro)	Winnipeg		76
Grand Rapids	Saskatchewan		472
Laurie River I and II	Laurie		11

Total Hydraulic Capability			4,942
Brandon & Selkirk Thermal			233

Total System Capability			5,175

POTENTIAL HYDRAULIC SITES (1)


Conawapa	Nelson	1,230
Gillam Island	Nelson	820
Gull	Nelson	630
Whitemud	Nelson	310
Red Rock	Nelson	190
Wuskwatim	Burntwood	205
Manasan	Burntwood	195
First Rapids	Burntwood	225
Notigi	Burntwood	100

		3,905

Total		9,080

(1) Net capacity addition to the integrated system.

Export Power Sales

Manitoba Hydro has a contract with 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 Xcel Energy for the sale of 500 megawatts of firm power commencing in 2005. The latter sale is subject to regulatory approvals.

Manitoba Hydro has signed 150 megawatt Seasonal Diversity Exchange Agreements with United Power Association and with Xcel Energy, which will continue until 2015 and 2019, respectively. A third Seasonal Diversity Exchange for 200 megawatts with Xcel Energy 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:


	•	200 megawatt sale to Ontario Power Generation Inc., formerly a part of Ontario Hydro 1998-2003

	•	50 megawatt sale to Otter Tail Power 1997-2005

	•	50 megawatt sale to Otter Tail Power 2000-2010

	•	60-30 megawatt sale to Minnesota Municipal Power Agency 2000-2012

	•	100 megawatt sale to Wisconsin Public Service 2002-2007

	•	50 megawatt sale to Great River Energy 2002-2007

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

In September 2001, Manitoba Hydro announced it had reached a Coordination Agreement with the Midwest Independent Transmission System Operator, Inc. (“the Midwest ISO”) which allows Manitoba Hydro to participate in the Midwest ISO. The Midwest ISO began full operations in February 2002. The relationship with the Midwest ISO provides Manitoba Hydro with non-discriminatory transmission access to the membership base of the Midwest ISO consisting of ten states. The Midwest ISO is responsible for directing the flow of up to 81,000 MW of power over more than 70,000 miles of high voltage transmission lines.

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

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 1997 through 2001.



	Average Noon Spot Rates

Foreign Currency	1997		1998		1999		2000		2001


	(Canadian dollars per unit of foreign currency)
United States Dollars (1)		$1.3844		$1.4831		$1.4858	$	1.4852		$1.5484

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


	1997		1998		1999		2000		2001

High	$	1.4399	$	1.5845	$	1.5475	$	1.5632	$	1.6050
Low		1.3345		1.4040		1.4420		1.4378		1.4901

Source: Bank of Canada.

At March 31, 2002, the noon spot exchange rate for U.S. dollars as reported by Bank of Canada, expressed in Canadian dollars, was $1.5935.

TABLES OF SUPPLEMENTARY INFORMATION


		Page

I.	Statement of Operating Fund Revenue		41
II.	Statement of Operating Fund Expenses		42
III.	Summary Financial Statements
	— Summary Statement of Revenue and Expenses		44
	— Summary Statement of Financial Position		45
IV.	Summary Financial Statements — Government Enterprises
	Summary of Operating Results		46
V.	Statement of Direct Funded Debt of the Province		47
VI.	Statement of Securities Guaranteed by the Province		53
VII.	Manitoba Hydro Statement of Operations		54
VIII.	Manitoba Hydro Balance Sheet		55
IX.	Manitoba Hydro Statement of Changes in Financial Position		56

I. STATEMENT OF OPERATING FUND REVENUE



		Year Ended March 31,

										Budget
										Estimate
		1999		2000		2001		2002		2003


		(In thousands of dollars)
Federal Transfers
	Equalization		$912,382		$1,271,747		$1,339,236		$1,399,151		$1,481,300
	Health and Higher Education Cash Transfer		—		130,595		—		—		—
	Canada Health and Social Transfer		513,301		509,247		638,017		685,236		728,800
	Other		133,941		161,506		114,112		122,046		152,174

			1,559,624		2,073,095		2,091,365		2,206,433		2,362,274

Income Taxes
	Individual Income Tax		1,807,157		1,611,231		1,756,647		1,658,962		1,682,300
	Corporation Income Tax		215,228		306,819		444,127		306,381		146,500
	Succession Duty and Gift Tax		40		40		40		359		0

			2,022,425		1,918,090		2,200,814		1,965,702		1,828,800

Other Corporation Taxes
	Corporation Capital Tax		120,167		134,544		124,182		132,431		129,000
	Insurance Corporations Tax		38,836		39,683		41,764		43,227		42,363
	Levy for Health and Education		224,122		225,255		238,785		244,416		243,300

			383,125		399,482		404,731		420,075		414,663

Sales Taxes
	Retail Sales Tax		883,563		917,667		932,783		965,560		1,032,500
	Commercial Energy Consumption Tax		55,330		56,966		67,981		65,924		65,600

			938,893		974,633		1,000,764		1,031,484		1,098,100

Luxury Taxes
	Liquor Control Commission		151,710		156,304		158,613		163,316		167,000
	Tobacco Tax		114,065		112,532		121,478		138,302		178,000
	Lottery Revenue		225,130		225,043		238,455		248,234		252,000

			490,905		493,879		518,546		549,852		597,000

Gasoline and Motive Fuel Taxes			224,384		218,433		223,548		222,871		225,300

Natural Resource Revenue
	Oil and Minerals Taxes and Royalties		9,590		17,097		57,003		19,135		26,530
	Water Power Rental Charges		48,298		48,725		53,369		109,300		98,690
	Forestry		6,448		6,405		6,045		6,535		6,547
	Fisheries and Wildlife		301		294		340		254		229
	1997 Flood Proofing Program		229		148		1,129		660		1,269
	Other		22,022		20,907		20,706		19,825		18,659

			86,888		93,576		138,592		155,709		151,924

Manitoba Hydro Retained Earnings Distribution			—		—		—		—		75,000

Other Fees, Permits, Licenses and Taxes
	Motor Vehicles and Drivers’ Licenses		70,438		69,712		71,858		72,439		85,541
	Crown Corporations		3,200		4,090		5,626		7,646		8,150
	Fines and Other Legal Fees		20,363		20,512		23,446		23,560		22,161
	Land Transfer Tax		11,505		12,049		12,392		13,647		13,000
	Other		61,298		48,329		50,340		67,859		46,683

			166,804		154,692		163,662		185,151		175,535

Sale of Government Assets			$491		$3,291		$495		$132		$2,400

Conditional Transfers from Municipalities			8,495		8,630		9,541		9,375		10,294

	Total Revenue Before Transfers from Fiscal Stabilization Fund (1)		$5,882,034		$6,337,801		$6,752,057		$6,746,784		$6,941,290

(1) See notes to “Statement of Operating Fund Transactions” for details of comments made by the Auditor General.

II. STATEMENT OF OPERATING FUND EXPENSES



		Year Ended March 31,

										Budget
										Estimate
		1999		2000		2001		2002		2003


		(In thousands of dollars)
Health and Community Services
	Health		$2,057,954		$2,310,004		$2,507,752		$2,669,381		$2,770,933
	Community Support Programs		6,250		6,295		5,953		5,793		5,731
	Family Services		660,887		743,289		774,255		810,484		839,047
	Seniors Directorate		668		918		770		713		739
	Status of Women		872		1,124		1,079		1,112		1,146
	Healthy Child Manitoba (1)		2,334		6,029		12,488		16,510		21,730

			2,728,965		3,067,659		3,302,297		3,503,993		3,639,326

Education
	Education and Training		1,120,510		1,187,354		1,265,908		1,288,295		1,341,448

Economic and Resource Development
	Agriculture and Food		98,737		205,568		161,969		116,807		121,151
	Housing (1)		39,718		—		—		—		—
	Sport		15,519		10,546		11,463		10,263		10,315
	Energy and Mines (1)		17,802		—		—		—		—
	Environment (1)		13,378		—		—		—		—
	Transportation and Government Services		234,423		292,173		297,542		301,249		341,157
	Industry, Trade and Mines		43,425		88,134		45,698		40,910		47,814
	Conservation		131,965		140,695		148,484		144,848		144,248
	Aboriginal and Northern Affairs		18,283		20,687		22,887		23,976		27,340
	Canada Manitoba Enabling Vote		23,784		21,289		30,175		2,866		83,917
	Urban Economic Development Initiatives		16,659		14,459		—		—		—

			653,693		793,551		718,218		640,919		775,942

Consumer Services, Public Protection and Other Government Services
	Justice		191,889		211,666		224,704		238,664		237,397
	Culture, Heritage and Tourism		53,333		59,240		58,486		58,791		59,201
	Civil Service		52,029		56,934		47,458		70,080		64,323
	Consumer and Corporate Affairs		9,734		8,903		9,059		9,129		9,576
	Executive Council		3,461		4,301		3,266		3,280		3,435
	Finance		30,557		48,264		45,191		46,525		51,333
	Government Services		58,918		—		—		—		—
	Legislative Assembly		19,187		28,908		21,180		22,089		22,807
	Labor & Immigration		13,089		21,691		24,134		25,214		26,016
	Flood Control and Emergency Expenditures		60,553		136,180		24,400		37,903		20,000
	Millennium Fund		—		2,474		—		—		��

II. STATEMENT OF OPERATING FUND EXPENSES (continued)



			Year Ended March 31,

												Budget
												Estimate
			1999			2000		2001		2002		2003


			(In thousands of dollars)
	Capital Initiatives			—			50,874		5,398		9,024		—
	Aboriginal Justice Initiatives			49,703			—		—		—		—
	Canada-Manitoba Infrastructure Program			10,804			5,301		—		—		—

				553,257			634,736		463,276		520,699		494,088

Manitoba Tax Credit Programs				177,964			177,725		218,102		233,344		231,244

Direct Local Government Assistance				137,506			110,043		135,753		134,624		141,926

Allowance for Losses and Expenditures Incurred by Crown organizations				(129	)		236		958		1,585		775

Public Debt
	Net Cost of Servicing Total Direct Public Debt (Interest, foreign exchange etc. after deducting recoveries from Crown organizations and short-term investment Earnings)			514,838			465,322		510,723		414,128		368,310

		Total Expenses Before Transfer to Debt Retirement Fund (2)		$5,886,604			$6,436,626		$6,615,235		$6,737,587		$6,993,059

Capital				$412,721			$381,819		$364,921		$329,771		$381,024
Operating				5,473,883			6,054,807		6,250,314		6,407,816		6,612,035

		Total Expenses Before Transfer to Debt Retirement Fund		$5,886,604			$6,436,626		$6,615,235		$6,737,587		$6,993,059

(1) Starting March 31, 2000, Child and Youth Secretariat is part of Healthy Child Manitoba; Housing is part of Family Services and Housing; Energy and Mines is part of Industry, Trade and Mines; and Environment is part of Conservation (formerly Natural Resources).

(2) See notes to “Statement of Operating Fund Transactions” for details of comments made by the Auditor General. Above Budget estimate for fiscal year ended 2003 excludes Year-End Savings.

III. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF REVENUE AND EXPENSES

FOR THE YEAR ENDED MARCH 31, 2002

(with comparative figures for 2001)


			2001		2002


			(In millions of
			dollars)
REVENUE
	Manitoba Collections:
		Retail Sales Tax		$933		$966
		Fuel Taxes		224		223
		Levy for health and education		239		244
		Mining Tax		45		9
		Liquor Control Commission		158		163
		Manitoba Lotteries Corporation		239		248
		Other Taxes		376		401
		Fees and other revenue		907		1,034
	Income Taxes:
		Corporation income tax		444		306
		Individual income tax		1,757		1,659
	Federal transfers:
		Equalization		1,339		1,399
		Canada Health and Social Transfer		545		685
		Federal Health Supplement		92		—
		Medical Equipment Fund		—		3
		Shared cost and other		312		263

TOTAL REVENUE				7,610		7,603

EXPENSES
	Health			2,616		2,740
	Education and Training			1,915		1,998
	Family Services and Housing			854		893
	Community, Economic and Resource Development			942		908
	Justice and Other Governments			655		685
	Debt servicing			514		502

TOTAL EXPENSES				7,496		7,726

NET REVENUE (EXPENSES)				114		(123	)
Increase in equity in government enterprises before Manitoba Public Insurance Corporation (MPIC) surplus distribution				317		194

Net Income before decrease in equity in government enterprises resulting from the MPIC surplus distribution				431		71
Decrease in equity in government enterprises — MPIC surplus distribution				—		(81	)

SUMMARY NET INCOME (LOSS)				$431		$(10	)

III. SUMMARY FINANCIAL STATEMENTS —

SUMMARY STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2002

(with comparative figures for 2001)


			2001		2002


			(millions)
ASSETS
	Cash and temporary investments			$1,275		$893
	Amounts receivable			925		880
	Inventories			31		26
	Loans and advances			558		579
	Equity in government enterprises			1,415		1,528
	Other long-term investments			2		7
	Deferred charge for non-devolved health care facilities (1)			138		137
	Tangible capital assets			1,799		1,874
	Pension assets			21		107
	Assets of non-devolved health care facilities (2)			694		759

TOTAL ASSETS				6,858		6,790

LIABILITIES
	Borrowings			20,459		20,682
		Less: Sinking funds		6,247		6,551
		Less: Debt incurred for and repayable by the Manitoba Hydro-Electric Board and Manitoba Lotteries Corporation		5,840		5,871

				8,372		8,260
		Less: Unamortized foreign currency fluctuation		220		143

	Net borrowings			8,152		8,117
	Accounts payable, accrued charges, provisions and deferrals			1,944		1,954
	Pension liability			3,050		3,217
	Liabilities of non-devolved health care facilities (2)			623		682

TOTAL LIABILITIES				13,769		13,970

ACCUMULATED DEFICIT				$6,911		$7,180

(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 (deficit) is recorded in the Consolidated Statement of Accumulated Deficit instead of the Consolidated 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.

IV. SUMMARY FINANCIAL STATEMENTS — GOVERNMENT ENTERPRISES (1)

SUMMARY OF OPERATING RESULTS AND FINANCIAL POSITION

FOR THE YEAR ENDED MARCH 31, 2002*

(with comparative figures for 2001)


												Resource			Total			Total
				Utilities		Insurance			Finance			Development			2002			2001


									(In millions of dollars)
Results of Operations
	Revenues:
		From operations			1,864		846			990			1			3,701			3,566

	Expenses:
		From operations			1,168		864			569			2			2,603			2,421
		Debt servicing			482		—			11			—			493			431
			��
	Total Expenses				1,650		864			580			2			3,096			2,852

	Net Income before surplus distribution				214		(18	)		410			(1	)		605			714
	Surplus distribution				—		(81	)		—			—			(81	)		—

	Net Income				214		(99	)		410			(1	)		524			714
	Transfer to the government				—		—			(411	)		—			(411	)		(397	)

	Net Increase in equity in government enterprises				214		(99	)		(1	)		(1	)		113			317

	Net increase in equity in government enterprises resulting from:
		Increase in equity in government enterprises before surplus distribution														194			317
		Decrease in equity in government enterprises surplus distribution														(81	)		—

		Net increase in equity in government enterprises														113			317


	*	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, 2002:

Utilities:

The Manitoba Hydro-Electric Board

Insurance:

Manitoba Public Insurance Corporation

The Workers Compensation Board

Finance:

Liquor Control Commission

Manitoba Lotteries Corporation

The Manitoba Product Stewardship Corporation

Resource Development:

Leaf Rapids Town Properties Ltd.

The Manitoba Hazardous Waste Management Corporation

V. STATEMENT OF DIRECT FUNDED DEBT OF THE PROVINCE

AS AT MARCH 31, 2002


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding		Ref.



							(In thousands of dollars)
Debenture Loans
(A) Payable in Canadian Dollars:
BJ		3-Sep-02		1987/8		9.75		374,006	(1)
DA		7-Apr-03		1993		7.875		300,000	(1)
EH		14-Jan-03		1999		5.00		100,000	(1)
EK		15-Jul-04		1999		5.65		300,000	(1)
DR		15-Nov-04		1994		9.375		500,000	(1)
EN		22-Jun-05		2000		6.25		250,000	(1)
EN		22-Jun-05		2000		6.25		300,000	(1)
DX		5-Jun-06		1996		7.75		250,000	(1)
EI		3-Mar-06		1999		5.25		150,000	(1)
EJ		1-Dec-06		1999		5.10		250,000	(1)
EC		16-May-07		1997		6.625		300,000	(1)
EB		21-May-07		1997		7.00		125,000	(1)
ED		2-Jun-08		1997		5.75		300,000	(1)
ED		2-Jun-08		1997		5.75		284,060	(1)
ED		2-Jun-08		1998		5.75		92,686	(1)
EG		2-Mar-09		1998		5.25		350,000	(1)
EG		2-Mar-09		1999		5.25		150,000	(1)
EL		1-Sep-09		1999		6.25		50,000	(1)
EL		1-Sep-09		1999		6.25		200,000	(1)
EO		25-Jan-11		2001		5.85		325,000	(1)
EO		25-Jan-11		2001		5.85		250,000	(1)
CM		15-May-11		1991		10.00		299,827	(1)
DE		22-Jul-13		1993		8.50		300,000	(1)
DT		22-Dec-25		1995		7.75		300,000	(1)
CL		5-Mar-31		1991		10.50		599,945	(1)

								6,700,524

Medium-Term Notes
C034-Internal		12-Apr-02		2001		Floating		147,350	(1)
C034-2-Internal		12-Apr-02		2001		Floating		9,720	(1)
C013-MTN		18-Dec-02		1997		5.39		77,000	(1)(3)
C029-MTN		17-Jan-03		2000		Floating		220,000	(1)
L001-MTN		17-Jan-03		2000		Floating		30,000	(1)
C030-MTN		14-Feb-03		2000		Floating		75,450	(1)
C017-MTN		2-Jun-03		1998		5.00		50,000	(1)
C010-MTN		18-Sep-03		1997		5.50		25,000	(1)
C039-MTN		3-Jan-05		2002		Floating		25,000	(1)
C045-MTN		22-Mar-04		2002		Floating		25,000	(1)
C043-MTN		8-Mar-05		2002		Floating		20,000	(1)
C042-MTN		15-Apr-05		2002		Floating		75,000	(1)
C041-MTN		7-Feb-06		2002		Floating		85,000	(1)
C025-MTN		12-Mar-07		1999		Floating		20,000	(1)
C008-MTN		24-Apr-07		1997		Floating		9,000	(1)
C021-MTN		2-Apr-08		1998		6.02		50,000	(4)
C044-MTN		2-Jun-08		2002		Floating		50,000	(4)
C028-MTN		27-Apr-09		1999		5.55		20,000	(4)
C027-MTN		19-Apr-10		1999		STEP		15,000	(5)
C022-MTN		15-Jul-10		1998		5.50		40,000	(1)
C035-MTN		15-Sep-13		2001		STEP		30,000	(5)

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


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding		Ref.



							(In thousands of dollars)
C038-MTN		15-Nov-13		2001		STEP		20,000	(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		50,000	(1)
C012-MTN		22-Sep-17		1997		6.50		50,000	(1)
L004-MTN		22-Sep-17		2000		6.50		25,000	(1)
C024-MTN		20-Aug-18		1998		6.75		20,000	(4)
C023-1 MTN		15-Nov-18		1998		5.50		75,000	(4)
C023-2 MTN		15-Nov-18		1998		5.50		25,000	(1)
L003 MTN		15-Nov-18		2000		5.50		75,000	(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		100,000	(1)
H004-MTN		29-Nov-02		2001		5.00		35,000	(1)
H002-MTN		17-Jan-03		2000		Floating		25,000	(1)
H003-MTN		17-Jan-03		2000		Floating		50,000	(1)
H006-MTN		1-Oct-03		2001		Floating		20,000	(5)
H001-MTN		30-Jun-05		2000		Floating		48,000	(1)
H010-MTN		30-Nov-06		2001		STEP		40,000	(5)
H008-MTN		25-Jun-07		2001		S&P TSE 60		15,000	(5)
H007-MTN		31-Jul-09		2001		STEP		15,000	(5)
H009-MTN		30-Nov-13		2001		STEP		30,000	(5)
C031-2 HEALTH		5-Mar-40		2001		6.20		50,000	(1)
D029-MTN		29-Nov-02		2001		5.00		40,000	(1)
D038 MTN		17-Jan-03		2001		Floating		50,000	(1)
D039 MTN		17-Jan-03		2001		Floating		25,000	(1)
D005-MTN		15-Jul-03		1998		4.75		100,000	(1)
D005-MTN		15-Jul-03		1999		4.75		50,000	(1)
D028		13-Oct-03		2000		Floating		5,000	(1)
D014-MTN		15-Nov-04		1999		5.10		25,000	(1)
D033-MTN		12-Jun-06		2001		STEP		25,000	(5)
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)
D042-MTN		15-Dec-07		2001		STEP		22,000	(5)
D034-MTN		15-Jun-08		2001		6.11		25,000	(5)
D041-MTN		15-Dec-08		2001		STEP		15,000	(5)
D013-MTN		15-Nov-09		1999		5.10		25,000	(4)
D010-MTN		15-Jan-09		1998		5.50		10,000	(5)
D026-MTN		14-Apr-10		2000		Floating		15,000	(5)
D002-MTN		15-Jul-10		1998		6.10		20,000	(4)
D035-MTN		16-Jul-10		2001		STEP		10,000	(5)
D007-MTN		15-Sep-10		1998		STEP		20,000	(5)
D004-MTN		15-Oct-10		1998		5.75		10,000	(4)
D011-MTN		15-Mar-11		1999		5.75		20,000	(4)
D036-MTN		16-Jul-11		2001		STEP		20,000	(5)
D037-MTN		7-Sep-11		2001		STEP		20,000	(5)
D046-MTN		15-Mar-12		2001		STEP		20,000	(5)
D047-MTN		15-Apr-12		2002		STEP		10,000	(5)
D048-MTN		15-Apr-12		2002		5.61		15,000	(5)
D032-MTN		31-May-12		2001		STEP		25,000	(4)
D031-MTN		26-Apr-13		2001		STEP		20,000	(4)

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


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding			Ref.



							(In thousands of dollars)
D044-MTN		15-Sep-13		2001		STEP		25,000		(5)
D040-MTN		15-Dec-13		2001		STEP		40,000		(5)
D045-MTN		15-Dec-13		2001		STEP		15,000		(5)
D049-MTN		15-Mar-14		2002		STEP		30,000		(5)
D043-MTN		15-Jun-17		2001		STEP		27,000		(5)
D003-MTN		1-Jun-18		1998		6.40		28,668		(5)
D009-MTN		15-Jan-19		1999		5.76		17,000		(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)

								3,558,642

Canadian Issues swapped to USD:
C013		18-Dec-02		1997		5.39		77,000
EN		22-Jun-05		2000		6.25		300,000		(1)
DE		22-Jul-13		1993		8.50		300,000		(1)

								(677,000	)

Foreign Issues swapped to Canadian Dollars:
CQ		15-Apr-02		1992				77,110
CQ-FX Hedge		15-Apr-02		1992				364,843
CT-FX Hedge		15-Sep-02		1992				85,008
CW-FX Hedge		18-Nov-02		1992				61,896
C013-FX Hedge		18-Dec-02		1997				38,450
DC-FX Hedge		22-Apr-03		1993				76,930
DD-FX Hedge		27-May-03		1993				23,474
L002		5-Sep-02		2000				42,300
CZ		1-Mar-03		1993				129,674
CZ		1-Mar-03		1993				266,000
DB		14-Apr-03		1993				81,947
DB		14-Apr-03		1993				42,427
DB-FX Hedge		14-Apr-03		1993				9,399
U005		30-May-03		2001				232,200
H005		30-Sep-03		2001				62,000
DF		28-Nov-03		1993				36,600
DI		8-Mar-04		1994				86,226
DK		28-Jun-04		1994				79,519
DN		19-Jul-04		1994				64,904
U002		23-Feb-05		1995				35,277
DW		14-Jun-06		1996				65,164
EM		22-Feb-10		2000				66,500
EM		22-Feb-10		2000				75,000
AZ		17-Jul-16		1986				200,630
C036		21-Nov-16		2001				39,340
C037		21-Nov-16		2001				13,110
BM		15-Jan-18		1988				254,960
BU		1-Dec-18		1988				136,375
CB		15-Jan-20		1990				136,475
CD		1-Apr-20		1990				337,890
								3,221,628

Total Canadian								12,803,794

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


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding			Ref.



							(In thousands of dollars)
(B) Payable in U.S. Dollars:
CQ		15-Apr-02		1992		8.00		478,050		(1)
CT		15-Sep-02		1992		6.875		478,050		(1)
CZ		1-Mar-03		1993		6.75		478,050		(1)(2)
DH		19-Jan-04		1994		6.125		557,725		(1)
EP		20-Nov-06		2001		4.25		796,750		(1)
EF		1-Oct-08		1998		5.50		398,375		(1)(2)
EM		22-Feb-10		2000		7.50		239,025		(1)(2)
EM		22-Feb-10		2000		7.50		239,025		(1)(2)
EM		22-Feb-10		2000		7.50		318,700		(1)(2)
AZ		17-Jul-16		1986		7.75		238,053		(1)(2)
BM		15-Jan-18		1988		9.125		318,700		(1)(2)
EE		15-Sep-18		1988		9.50		318,700		(1)
BU		1-Dec-18		1988		9.625		478,050		(1)
CB		15-Jan-20		1990		8.80		398,375		(1)
CD		1-Apr-20		1990		9.25		478,050		(1)
CO		15-Sep-21		1991		8.875		478,050		(1)

								6,691,728

Medium-Term Notes (Payable in U.S. Dollars)
U005		30-May-03		2001		Floating		239,025
H005		30-Sep-03		2001		Floating		63,740
U002		23-Feb-05		1995		7.47		39,838		(1)(2)

								342,603

Foreign Issues swapped to Canadian Dollars:
CQ		15-Apr-02		1992		6.31		79,675
CQ-FX Hedge		15-Apr-02		1992		6.31		378,456
CT-FX Hedge		15-Sep-02		1992		6.875		87,643
CW-FX Hedge		18-Nov-02		1992		5.50		63,740
C013-FX Hedge		18-Dec-02		1997		5.39		39,838
DC-FX Hedge		22-Apr-03		1993		Floating		78,082
DD-FX Hedge		27-May-03		1993		Floating		23,903
CZ		1-Mar-03		1993		6.75		478,050
DB		14-Apr-03		1993		6.20		46,012
DB-FX Hedge		14-Apr-03		1993		6.20		9,561
U005		30-May-03		2001		Floating		239,025
H005		30-Sep-03		2001		Floating		63,740
U002		23-Feb-05		1995		7.47		39,838
EF		1-Oct-08		1998		5.50		79,675
EM		22-Feb-10		2000		7.50		318,700
AZ		17-Jul-16		1986		7.75		238,053
BM		15-Jan-18		1988		9.125		318,700
BU		1-Dec-18		1988		9.625		159,350
CB		5-Jan-20		1990		8.80		159,350
CD		1-Apr-20		1990		9.25		398,375

								(3,299,764	)

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


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding			Ref.



							(In thousands of dollars)
Foreign Issues swapped to U.S. Dollars:
CW		18-Nov-02		1992				130,959
C013		18-Dec-02		1997				86,208
DB		14-Apr-03		1993				92,025
C032		12-Oct-10		2000				74,815
DC		22-Apr-03		1993				157,178
DD		27-May-03		1993				86,049
DM		3-Aug-04		1994				76,886
EN		22-Jun-05		2000				321,887
EF		1-Oct-08		1998				74,088
EM		22-Feb-10		2000				154,762
DE		22-Jul-13		1993				300,195

								1,555,051

Total U.S.								5,289,618

(C) Payable in Swiss Francs:
DC		22-Apr-03		1993		5.25		141,960		(1)(3)

								141,960

Swapped to U.S. Dollars:
DC		22-Apr-03		1993		5.25		141,960

								(141,960	)

								0

(D) Payable in Japanese Yen:
L002		5-Sep-02		2000		0.46		36,060		(1)(2)
CW		18-Nov-02		1992		5.50		120,200		(1)(3)
C032		12-Oct-10		2000		1.90		60,100		(1)(3)
DB		14-Apr-03		1993		4.92		162,270		(1)(2)(3)
DD		27-May-03		1993		5.10		72,120		(1)(3)
DF		28-Nov-03		1993		4.10		36,060		(1)(2)
DI		8-Mar-04		1994		4.03		84,140		(1)(2)
DK		28-Jun-04		1994		4.20		72,120		(1)(2)
DN		19-Jul-04		1994		4.70		60,100		(1)(2)
DM		3-Aug-04		1994		4.50		60,100		(1)(3)
DW		14-Jun-04		1996		3.45		60,100		(1)(2)
C036		21-Nov-16		2001		2.00		36,060
C037		21-Nov-16		2001		2.03		12,020

								871,450

Japanese Yen Issues swapped to Canadian Dollars:
L002		5-Sep-02		2000		0.46		36,060
DK		28-Jun-04		1994		4.20		72,120
DN		19-Jul-04		1994		4.70		60,100
DB		14-Apr-03		1993		4.92		81,135
DF		28-Nov-03		1993		4.10		36,060
DI		8-Mar-04		1994		4.03		84,140
DW		14-Jun-04		1996		3.46		60,100
C036		21-Nov-16		2001		2.00		36,060
C037		21-Nov-16		2001		2.03		12,020

								(477,795	)

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


			Year of		Interest
Series	Date of Maturity		Issue		Rate (%)		Amount Outstanding			Ref.



							(In thousands of dollars)
Japanese Yen Issues swapped to U.S. Dollars:
CW		18-Nov-02		1992		5.50		120,200
DB		14-Apr-03		1993		4.92		81,135
C032		12-Oct-10		2000		1.90		60,100
DD		27-May-03		1993		5.10		72,120
DM		3-Aug-04		1994		4.50		60,100

								(393,655	)

								0

Builder Bonds (Payable in Canadian Dollars)
#4		15-Jun-03		1998		Floating		16,719		(7)
		15-Jun-03		1998		Discount		14,623		(1)
#5		15-Jun-04		1999		Floating		10,023		(7)
		15-Jun-02		1999		Fixed		193,809		(1)
		15-Jun-04		1999		Discount		30,377		(1)
#6		15-Jun-05		2000		Floating		25,188		(7)
		15-Jun-03		2000		Fixed		313,016		(1)
		15-Jun-05		2000		Discount		36,598		(1)

								640,353

Total Bonds and Debentures								18,733,765

Canada Pension Plan (Payable in Canadian Dollars)

Var.				2001-12				1,259,971		(9)

Treasury Bills Payable in Canadian Dollars:
Various				1999-2000				325,000		(8)

TOTAL BORROWINGS								20,318,736

VI. STATEMENT OF SECURITIES GUARANTEED BY THE PROVINCE

AS AT MARCH 31, 2002


		Year of		Interest
Series	Date of Maturity	Issued		Rate (%)	Amount Outstanding			Ref.



					(In thousands of dollars)
DEBT OF SELF-SUPPORTING UTILITIES:
The Manitoba Hydro-Electric Board
Savings Bonds: (Payable in Canadian Dollars)
1	15-Jun-92		1989	Matured		85
2	15-Jun-93		1990	Matured		28
3	15-Jun-96		1991	Matured		226
4	15-Jun-97		1992	Matured		600
5	15-Jun-01		1996	Matured		2,330		(7)
6	15-Jun-02		1997	Floating		9,961		(7)
	15-Jun-00		1997	Matured		518
	15-Jun-02		1997	6.05		98,988
7	15-Jun-06		2001	Floating		13,629
	15-Jun-04		2001	5.50		10,916
	15-Jun-04		2001	5.50		200,000
	15-Jun-06		2001	6.00		70,180

						407,461

Total Manitoba Hydro-Electric Board							407,461

Manitoba Hydro Promissory Notes				Floating		180,000	180,000

Total Self-Supporting Guaranteed Debt							587,461

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							7,729	(6)

References:


1.	Non-callable/redeemable.

2.	All or part swapped into a Canadian dollars.

3.	All or part swapped to U.S. dollars.

4.	Callable as per terms.

5.	Extendable as per terms.

6.	The Province has only guaranteed the principal portion of the issue.

7.	Redeemable at holder’s option on each June 15 and December 15 prior to maturity.

8.	91-day Treasury Bills issued to the public in the amount of $25,000,000 weekly.

9.	Held by and callable at par at the option of the Minister of Finance of Canada on 6 months’ notice, subject to the requirements of the Canada Pension Plan.

VII. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF OPERATIONS



			For the Year Ended March 31,

			1998			1999			2000			2001			2002


			(In thousands of dollars)
Revenues
	Electric
		Manitoba		$738,698			$748,277			$737,230			$781,063			$786,036
		Extraprovincial		296,958			326,200			376,570			479,673			587,893
	Other revenue			5,420			7,153			10,499			11,683			10,415
	Natural gas			—			—			268,707			503,423			479,346

				1,041,076			1,081,630			1,393,006			1,775,842			1,863,690

Expenses
	Operating and administrative			211,458			222,846			270,787			289,442			304,214
	Depreciation			191,002			197,969			227,165			249,425			259,774
	Water rentals			55,789			50,518			50,681			55,783			112,783
	Fuel and power purchased			14,149			58,813			33,221			48,164			71,423
	Capital and other taxes			37,661			38,543			57,612			59,530			55,113
	Cost of gas sold			—			—			182,043			384,038			364,882

				510,059			568,689			821,509			1,086,382			1,168,189

Net Income before Finance Expense				531,017			512,941			571,497			689,460			695,501

Finance Expense
	Interest on debt			505,498			506,278			514,168			540,897			586,798
	Amortization of debt discount and expense			14,812			10,768			8,699			5,822			11,138
	Interest applied to construction			(19,508	)		(19,704	)		(17,279	)		(17,765	)		(25,212	)
	Investment income			(80,296	)		(84,505	)		(85,938	)		(108,486	)		(91,029	)

				420,506			412,837			419,650			420,468			481,695

Net Income
	Transferred to Retained Earnings			$110,511			$100,104			$151,847			$268,992			$213,806

VIII. MANITOBA HYDRO

CONSOLIDATED BALANCE SHEET



		As at March 31,

		2001		2002


		(In thousands of dollars)
ASSETS
Capital Assets
	In service		$8,762,112		$9,071,716
	Less accumulated depreciation		2,608,876		2,834,351

			6,153,236		6,237,365
	Construction in progress		275,449		388,353

			6,428,685		6,625,718

Current Assets
	Bank balances and temporary investments		250		13,656
	Accounts receivable and accrued revenue		459,934		378,986
	Interest receivable		15,678		24,751
	Materials and supplies, at average cost		63,456		90,694

			539,318		508,087

Other Assets
	Pension assets		443,441		472,713
	Deferred debt costs		88,148		902,887
	Other deferred expenses and receivables		313,372		379,501
	Sinking fund investments		1,148,995		1,514,514

			1,993,956		3,269,615

			$8,961,959		$10,403,420

LIABILITIES AND RETAINED EARNINGS
Long-term debt net of sinking fund			$4,870,824		$5,622,529
Sinking fund shown as an asset			1,148,995		1,514,514

			6,019,819		7,137,043

Current Liabilities
	Accounts payable and accrued liabilities		192,262		209,630
	Bank Overdraft		2,499		—
	Notes payable		209,724		180,000
	Accrued Interest		94,982		99,670
	Current portion of long-term debt		434,829		523,695

			934,296		1,012,995

Other Liabilities
	Deferred liabilities and credits		253,809		229,997
	Pension obligation		386,016		422,430

			639,825		652,427

Contributions in aid of construction			281,278		300,402

Retained earnings			1,086,741		1,300,553

			$8,961,959		$10,403,420

IX. MANITOBA HYDRO

CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION



		As at March 31,

		2001			2002


		(In thousands of dollars)
Cash Provided From (Used For) Operations
	Cash receipts from customers		$1,663,980			$1,859,477
	Cash paid to suppliers and employees		(913,221	)		(839,340	)
	Interest Paid		(530,627	)		(555,655	)
	Interest Received		113,698			89,482

			333,830			553,964

Cash Provided From (Used For) Financing
	Proceeds from long-term debt		296,893			1,247,740
	Retirement of long-term debt		(608,980	)		(1,095,800	)
	Sinking Fund Withdrawal		275,289			—
	Mitigation liability		(1,814	)		(18,722	)
	Notes Payable		208,314			(31,455	)
	Other		—			(1,064	)

			169,702			100,699

Cash Used For Investment
	Additions to capital assets net of Contributions		362,182			439,248
	Sinking fund payment		118,865			127,365
	Other		40,161			72,145

			521,208			638,758

Increase/(Decrease) in Cash			(17,676	)		15,905
Cash at Beginning of Year			15,427			(2,249	)

Cash at End of Year			$(2,249	)		$13,656

(PROVINCE OF MANITOBA LOGO)

Province Of Manitoba 18-KAnnual report (foreign governments)