Finance minister Donna Harpauer shared that the province’s forecasted deficit will be lower in the first quarter of 2021, showing an improving economy and a positive outlook for future budgets.
The details of the final quarter budget are the last look that Saskatchewan residents will receive before the provincial election set for Oct. 26, and the first look at COVID-19’s economic impact following the reopening of the province’s economy.
The forecasted deficit is $2.1 billion in the first quarter, which is a $296 million improvement from the 2020-21 budget.
Harpaur is expecting to continue seeing smaller deficits over the next three years, cumulating in a return to the Saskatchewan Party’s pledged balanced budget with a $125 million forecast surplus in 2024-25.
“Saskatchewan’s fiscal foundation is solid and our province’s economy and economies around the world continue to re-open and recover,” said Harpauer, in a press release. “We have seen positive signs in recent months but we are aware that certain sectors and industries continue to face significant challenges.”
The economy is expected to improve from the 6.3 per cent decline forecast in this year’s budget, finishing the final quarter with a forecast to contract 5.5 per cent.
Forecasted revenue for the first quarter of 2021 is $14.05 billion, an increase of 2.9 per cent or $389 million from budget. The increase in revenue will be due to $338 million provided by the federal-provincial Safe Restart Agreement, with a $6 million increase in resource revenue.
Expenses are expected to be $16.18 billion, an increase of 0.6 per cent or $103 million from budget. The increase in expenses breaks down as a $70 million increase to the health system, $70 million to municipalities and $35 million to supports for the tourism industry.
The provincial government’s recent announcement of $40 million in funding to aid in the safe reopening of schools is also included in the forecast, leaving $160 million left in the COVID contingency fund.
Public debt is expected to decrease by $455 million in 2020-21, due largely to lower Government Enterprise debt and the low deficit forecast.
Revenue isn’t expected to return to pre-COVID levels until 2022-23, said Harpauer, with expanse growth targeted at 1.5 per cent per year.
Harpauer is expecting to see deficits of 1.4 billion next year, $855 million in 2022-23 and $340 million in 2023-24. Public debt is expected to reach $33.6 billion by 2024-25, due to infrastructure needs.
The government indicated in a press release that this outlook is consistent with expectations and is based on global reopening after COVID-19 to continue at its current pace.
“As the first province to present a budget that factors in COVID-19’s economic impact and the first province to release a four-year fiscal forecast, our government has been the most financially transparent jurisdiction in Canada during the pandemic,” said Harpauer.
“Moving forward, our government is focused on creating the right environment for our economic recovery to drive our revenue growth, continue to invest in the priorities of Saskatchewan and carefully manage spending to return our province to balance,” she continued.
