Saskatchewan‘s 2020-21 first quarter budget update and medium-term outlook shows an improving economy, a smaller deficit and a return to surplus in 2024-25.
The forecast deficit is $2.1 billion at first quarter, a $296 million improvement from the 2020-21 budget, and the government’s medium-term outlook includes progressively smaller deficits over the next three years before a $125 million forecast surplus in 2024-25.
The Saskatchewan economy is now forecast to contract 5.5 per cent in 2020, an improvement from the 6.3 per cent decline forecasted in the 2020-21 budget. In 2021, Saskatchewan’s economy is projected to rebound with real GDP growth of 4.6 per cent.
“Saskatchewan’s fiscal foundation is solid and our province’s economy and economies around the world continue to re-open and recover,” Finance Minister Donna Harpauer said. “We have seen positive signs in recent months but we are aware that certain sectors and industries continue to face significant challenges.”
At first quarter, revenue is forecast to be $14.05 billion, an increase of $398 million, or 2.9 per cent, from budget. This is largely due to $338 million of federal funding under the federal-provincial Safe Restart Agreement. A modest $56 million increase in resource revenue is also forecast at first quarter.
Expense is forecast to be $16.18 billion, an increase of $103 million, or 0.6 per cent, from budget. The forecast includes a $72 million increase for the health system, a $70 million increase for municipalities and a $35 million increase for new supports for the tourism industry.
Earlier this month, Premier Scott Moe announced that the province will invest $40 million from the budget’s $200 million health and public safety contingency to ensure more resources are available for safe classrooms. This investment is reflected in the first quarter update, and a $160 million contingency remains.
At first quarter, public debt is forecast to decrease by $455 million from budget, primarily due to the improvement in the deficit forecast and lower Government Business Enterprise debt.
The province’s medium-term outlook projects a $125 million surplus by 2024-25. Revenue will not return to pre-crisis levels until 2022-23, and expense growth is targeted at 1.5 per cent 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.
The Mercury will have more on this story later.
