Following the economic turmoil from the coronavirus pandemic, the government of Saskatchewan says the province’s budget will return to a surplus in 2024-25.
On Thursday, the provincial government released its first-quarter budget update, which forecasts a $2.1-billion deficit, $296 million less than previously projected.
The government says its medium-term outlook includes smaller deficits over the next three years with deficits of $1.4 billion in 2021-22, $855 million in 2022-23, and $340 million in 2023-24.
The province says in 2024-25, they expect a surplus of $125 million.
“Fiscally we’re in a pretty good position compared to a lot of provinces,” said Jason Childs, associate professor of economics at the University of Regina.
“We don’t come into this with the kind of debt loads Ontario, Quebec and New Brunswick do. So we’ve got a little more capacity to run these deficits without having a serious future detrimental impact on our spending capabilities and our ability to borrow.”
Earlier this year, the government was prepared to release a balanced budget, but with the oil crash and the coronavirus pandemic hitting at the same time, provincial revenues were down while expenses were up as the government dealt with the health crisis.
As a result, the government put over $100 million in unbudgeted monies into the ministries overseeing health, education, tourism and municipalities.
Finance Minister Donna Harpauer says the aid packages have resulted in a better economic recovery than initially budgeted.
At the first quarter, revenue is forecasted to be $14.05 billion, an increase of 2.9 per cent – or $400 million – over what the 2020-21 budget forecast.
This is largely due to $338 million of federal funding. The rise in oil prices also increased revenue by $56 million.
Additionally, the province’s GDP is projected to decrease by 5.5 per cent in 2020, which is less than the 6.3 per cent contraction initially forecasted in the 2020-21 budget.
“Higher-than-expected oil prices and production, along with the positive impact of federal and provincial support measures, including provincial capital stimulus, are the primary reasons for the improved outlook,” said Harpauer.
The government says they are not increasing taxes or cutting spending for 2020-21.
“We fully recognize that we’re going to, yes, have austerity budgets, but that doesn’t mean cutting. That just means minding spending,” Harpauer said.
“Can we have any large grandiose announcements probably for the next couple of years? I’m going to say not, unless it’s going to stimulate further growth into the future.”
While revenues are higher than projected, the province says, revenue will not return to pre-crisis levels until 2022-23, says Harpauer.
Over the course of the medium term, public debt is forecasted to rise to $33.6 billion by 2024-25, primarily for needed infrastructure.
Childs says he was taken by surprise by the budget update.
“It’s nice to see positive fiscal news for a change rather than ever more doom and gloom and deeper and deeper holes, Childs said. “Let’s be realistic we’re still in a big hole here, it’s just one shovel less full of dirt.”
However, the Opposition felt different as it criticized the update for lacking in details and proper scrutiny because it was presented when the legislature isn’t in session.
“It sort of baffles me when I heard the finance minister … saying that it’s time for austerity,” said NDP finance critic Trent Wotherspoon.
“We have an economy that’s in recession and people out of work. It certainty is not a time for more austerity and more cuts within Saskatchewan right now.”
With files from the Canadian Press.