The federal government is increasing its support to Newfoundland and Labrador by suspending the struggling province's obligation to pay back $267-million in debt.

The sharp drop in oil prices over the past year has devastated the province's bottom line, leading to an April budget that hiked taxes and fees and led to spending cuts in the public service and the closing of public libraries.

The province's debt to Ottawa dates back to a 2005 federal decision to provide loans to six provinces to help them manage declines in equalization payments.

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Newfoundland still owes $267-million of the $378-million interest-free loan. The province has recently been paying back the money at a rate of $2.3-million per month.

Ottawa is now suspending those payments until April 1, 2022.

"Canadians expect their governments to work together to help them through hard times," said federal Finance Minister Bill Morneau in a statement. "Today's action will not just support a stronger Newfoundland and Labrador but a stronger future for Canada."

Newfoundland Premier Dwight Ball said in a statement that he is "grateful" for the federal help.

The loan decision is in addition to two other federal moves aimed at helping Newfoundland. In March, Ottawa approved a $32-million payment to the province under the Fiscal Stabilization Program, and Newfoundland is among the regions listed in the March 22 federal budget that qualify for more generous employment insurance benefits.

Since the province's Liberal government tabled its austerity budget, Mr. Ball's popularity has plummeted. A new survey by the Angus Reid Institute found his approval rating has dropped to 17 per cent, down from 60 per cent in February, making him Canada's least popular premier.