Deficit in Saskatchewan forecast to be $381.5M lower than estimated

Saskatchewan’s finance minister says the province’s economy has performed better than anticipated since she tabled her budget in June.

Donna Harpauer said she is now forecasting the deficit for 2020-21 to be $381.5 million lower than budgeted.

The deficit is now forecast to be $2 billion for the fiscal year.

“Real GDP is forecast to decline 5.0 per cent, compared to a decline of 6.3 per cent forecast at budget. Saskatchewan’s unemployment rate was the lowest in Canada in October and total employment, on an unadjusted basis, is nearing pre-pandemic levels,” Harpauer said Friday in a statement.

“As a result, our planned path to balance in 2024-25 is unchanged.”

The Saskatchewan Party pledged during the recent election campaign to balance the budget by 2024 with a surplus of $43 million.

The debt as a percentage of GDP is forecast to be 19.6 per cent as of March 31, 2021, the lowest among the provinces.

However, officials said the full economic recovery is tied to COVID-19 outcomes.

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Real GDP is forecast to increase by 3.4 per cent in 2021. Higher potash production, a rebound in uranium production and a global recovery will be key contributors to growth, officials said.

“As reflected in these latest forecasts, our government is managing the province’s finances carefully through the pandemic,” Harpauer said.

“The mid-year update also includes $260 million of contingencies to cushion against potential pandemic-related revenue and spending shocks over the remainder of the fiscal year.”

Spending is forecast to rise by 0.8 per cent to $16.2 billion, Harpauer said, due to increases to the health, education, municipal and tourism sectors.

Revenue is projected to increase 3.7 per cent to $14.2 billion, which is being attributed to higher federal transfers, higher government business enterprise net income and higher non-renewable resource revenue.

Tax revenue is $41 million lower than estimated which Harpauer said reflects the government’s commitment to reduce the small business corporate income tax rate.

Harpauer said her projections also included the estimated $133 million in platform promises made during the provincial election.

Among those promises are reducing SaskPower bills by 10 per cent for one year, restarting the community rink affordability grant and bringing in a home renovation tax credit.