There’s an old joke about power and money. A question is posed to a group prime ministers: if they’re reincarnated what would they like to be in their next life? After mere moments of discussion, they all agree. They would like to be reincarnated as bond fund managers. The reason: because bond fund managers are the ones with real power.

Right now Manitoba is paying about $842 million to cover this year’s interest payments on the provincial debt.

Here’s some context: The budget for Agriculture, Food and Rural Development is $204 million. The budget for Infrastructure and Transportation is $607 million. Combine the budgets for farmers and roads and the total is still less than the amount Manitoba pays bankers and bond holders for interest payments each year on debt taken out over the past many decades.

Each Manitoban is on the hook for about $650 to make the province’s annual interest payments. For a family of four, that’s $2,600. That could cover two months of mortgage payments on an average Winnipeg home.

It’s worth considering what will happen if Manitoba’s interest payments go up.

An interest rate increase of 0.25 per cent would drive up Manitoba’s interest payments by about $51 million per year. That’s a little more than the $50 million budgeted for the Children and Youth Opportunities.

An interest rate increase of 0.5 per cent would drive up Manitoba’s interest payments by about $102 million. That’s a hair less than the combined budgets for Tourism, Culture, Heritage, Sport and Consumer Protection; as well as, Multiculturalism and Literacy.

General global economic conditions could push interest rates up. If economies heat up and drive inflation up, central banks are likely to increase interest rates. Even a small increase would be costly.

Manitoba’s financial situation could also push the province’s interest rates up.

Last December, international bond rating agency Standard and Poor’s had this to say about Manitoba’s finances: “the stable outlook reflects our expectation that Manitoba’s budgetary results will continue to strengthen and it will remain on track to achieve a balanced budget by fiscal 2016.” We are now in fiscal 2015-16 and a balanced budget is looking a long way off. Standard and Poor’s will undoubtedly notice.

Moody’s, another international bond rating agency, released a statement this spring that says: “a loss of fiscal discipline leading to a continued and sustained increase in debt … and limited potential that Manitoba will return to a balanced budget … could result in a deterioration of its current credit profile.” In other words, Moody’s is worried about Manitoba’s increasing debt.

Why is it important to watch Standard and Poor’s and Moody’s? Home owners with bad credit ratings pay higher interest rates to make lenders comfortable with the increased risk the loan will go bad. It’s the same for governments. If bond rating agencies view Manitoba as a higher risk, the province’s interest costs will go up.

Prudent home owners think about what they’ll do if increased interest rates drive up their mortgage payments. Manitoba taxpayers need to think about the same thing. If the province’s interest payments go up, which programs should be cut? Which taxes should go up?

Powerful politicians can do many things. They can make laws and impose taxes. But they cannot force the bond market to lend them cheap money. Manitoba has to get the provincial budget under control. If it doesn’t, bond fund managers will.