The Government of Saskatchewan’ 2020-21 First Quarter Budget Update shows a smaller deficit and a return to a modest surplus of $125 million by 2024/25.
The forecast deficit at the first quarter is $2.1 billion, which is a $296 million improvement from the initial 2020-21 budget. The government’s medium-term outlook shows progressively smaller deficits over the next three years before a $125 million forecast surplus in 2024-25.
In 2021, Saskatchewan’s economy is projected to rebound with real GDP growth of 4.5 percent.
Finance Minister Donna Harpauer says that the province’s fiscal foundation is solid and Saskatchewan’s economy and economies around the world continue to re-open and recover.
“We have seen positive signs in recent months, but we are aware that certain sectors and industries continue to face significant challenges,” said Harpauer.
The forecast revenue at first quarter is up $398 million from budget, to $14.05 billion. The increase is largely due to $338 million in federal funding under the Safe Restart Agreement. Resource revenue is also set to increase by $56 million.
Expenses are forecast to be $16.18 billion, which is an increase of $103 million, or 0.6 percent from budget. The forecast includes a $72 million increase for the health system, $70 million for municipalities, and $35 million for new supports for the tourism industry.
Premier Scott Moe announced earlier this month that the province would invest $40 million from the province’s $200 million health and public safety contingency fund to ensure more resources are available for schools to be able to reopen safely.
Public debt is forecast to decrease by $455 million, primarily due to the improvement to the deficit forecast and lower Government Business Enterprise debt.
Harpauer says that all jurisdictions will see their debt rise.
“Our province had the third lowest net debt-to-GDP ratio in the country in 2020 and it is expected that Saskatchewan will continue to have one of the lowest ratios in the country through the medium term,” said Harpauer in a news release. “Our debt is being managed responsibly while we continue to invest in the province of Saskatchewan.”
The province is projecting a $125 million surplus by 2024-25. They say that revenue will not return to pre-crisis levels until 2022-23, and expense growth is targeted at 1.5 percent per year. As a result, deficits of $1.4 billion (2021-22), $855 million (2022-23), and $340 million (2023-24) are forecast before a return to surplus in 2024-25.
Over the course of the medium term, public debt is forecast to rise to $33.6 billion by 2024-25, primarily for needed infrastructure.
More to come.
