2020-21 Deficit Lower, Province to Return to Balance by 2024-25
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 forecast 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.
“The health and safety of Saskatchewan people are our highest priorities as we continue to meet the challenge of the global pandemic,” Harpauer said. “Our government is investing in priorities and ensuring the province is well-positioned to recover and return to balance over time.”
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.
“All jurisdictions will see their debt rise,” Harpauer said. “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. Our debt is being managed responsibly while we continue to invest in the province of Saskatchewan.”
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 outlook is consistent with the province’s economic forecast and is based on a reopening of the economies in Saskatchewan, Canada and globally at its current pace, and that any resurgence in COVID-19 can be successfully mitigated.
Over the course of the medium term, public debt is forecast to rise to $33.6 billion by 2024-25, primarily for needed infrastructure.
“As the first province to present a budget that factors in COVID-19’s economic impact and the first province to release a four-year fiscal forecast, our government has been the most financially transparent jurisdiction in Canada during the pandemic,” Harpauer said. “Moving forward, our government is focused on creating the right environment for our economic recovery to drive our revenue growth, continue to invest in the priorities of Saskatchewan and carefully manage spending to return our province to balance.”