The Manitoba Government is projecting a lower-than-expected year-end deficit, despite the rising costs associated with COVID-19.
In a mid-year financial report released Thursday the province is now projecting to end the fiscal year in March $2.048 billion in the red, down from the $2.938 billion deficit the government had been predicting in its last fiscal report released in September.
While the projected deficit is still a record-high for Manitoba, Finance Minister Scott Fielding said the drop is primarily due to $648 million in federal transfer supports, which offset roughly 20 per cent of Manitoba’s anticipated expenditures of $3.2 billion.
“Our government will continue to invest in Manitoba’s safe recovery and reinforce public health, as well as economic and fiscal resilience,” said Fielding in a government release.
“We will invest when and where it is needed, ensuring the public health response and individual and business supports are in place as we continue to battle COVID 19 and look ahead to vaccine deployment and the longer-term recovery.”
Manitoba’s previous highest recorded deficit high was just under $1 billion following severe flooding in 2011.
Provincial revenue is forecast to be $372 lower than had been budgeted this fiscal year, according to the report.
The government blames the losses on the economic shutdown brought on by the pandemic, led largely by a drop in income and other taxes, own-source revenue, and fledgling revenues from the Manitoba Liquor and Lotteries Corporation due in the most part to the shut down of casinos.
Meanwhile the government says it has also committed $3.2 billion in response to the ongoing COVID-19 pandemic. It says the province has spent $633 million more than it had originally budgeted, including $522 million on personal protective equipment and additional staffing costs for health-care officials.
“Our government’s number one priority is protecting our most vulnerable Manitobans from COVID-19 and ensuring our health-care system is there for all Manitobans when they need it, during the pandemic, and well after the pandemic,” said Premier Brian Pallister in the release.
“Manitoba was hit with the first and second wave of COVID-19 in the fall and early winter, which is creating unprecedented challenges for our health-care system and the economy, and these challenges called for additional support measures to protect Manitobans and support local businesses.”
Pallister said the red ink is likely to continue beyond the end of the fiscal year.
“COVID could last a lot longer than we thought,” Pallister said.
“I think it’s a question of spreading out the deficit, probably, over a longer period rather than just in one fiscal (year).”
Opposition questions spending
The report shows the province’s fiscal stabilization account, commonly called the rainy-day fund, remains at $800 million after the legislature approved supplementary borrowing of $5 billion in the spring.
The government also says it expects Manitoba’s real GDP to drop by 4.6 per cent in 2020, but rebound again in 2021 by a projected 4.1 per cent.
The Opposition New Democrats said the government should be spending more to help those affected by the pandemic, including businesses owners who have had to close their doors under public-health orders.
The NDP pointed to the hundreds of millions of dollars saved up in the rainy-day fund.
“There are people who are losing their livelihoods, that have built businesses from scratch. And they’re seeing their dreams disappear on them overnight,” NDP finance critic Mark Wasyliw said.
“Where is their government when they need them?”
Manitoba has seen a long list of deficits going back to 2009 under the former NDP government. The provincial net debt more than doubled in the ensuing decade and two bond-rating agencies downgraded the province’s rating.
The Progressive Conservatives, elected on a promise to cut taxes and balance the books over two terms, recorded a razor-thin $5-million surplus in the last fiscal year just before the COVID-pandemic took hold.
–With files from Steve Lambert with The Canadian Press
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