Government Releases Preliminary Revenue Impacts
The Government of Saskatchewan today provided a range of preliminary revenue impacts, using three different scenarios related to the economic impact of the COVID-19 pandemic.
The potential revenue decline in 2020-21 ranges from $1.3 billion to $3.3 billion, depending on the duration of pandemic-related economic restrictions.
“We are less than three weeks into the new fiscal year and right now we just don’t know how long restrictions will remain in place in Saskatchewan, in Canada and around the world,” Finance Minister Donna Harpauer said. “That’s why it is still incredibly difficult to forecast with any certainty. We believe however it is important that we release these different scenarios, to let Saskatchewan people know just how much of an impact the pandemic is having on our economy and revenues.”
The potential revenue declines are based on three economic scenarios. Each scenario includes assumptions on a number of economic factors, including the duration of current economic restrictions, how soon resource prices may recover and anticipated consumer behaviour once restrictions are lifted.
Real GDP scenarios for 2020 are all negative and range from a decline of 4.1 per cent under the most optimistic scenario to a decline of 14.9 per cent in the most pessimistic scenario. At this time, the Government is managing spending within the amounts allocated in the budget estimates released on March 18, 2020.
“Our government has committed to provide all financial resources necessary to address the COVID-19 pandemic, and this will likely result in spending increases beyond the amounts allocated in the 2020-21 Estimates,” Harpauer said.
Harpauer pointed to strong management of the province’s finances as providing a solid fiscal foundation from which to manage the pressure from the current pandemic crisis and ultimate recovery.
Saskatchewan was on track for a surplus in 2019-20 and 2020-21 prior to the COVID-19 pandemic and oil price collapse. Saskatchewan has maintained the second highest credit rating in the country, continues to have among the lowest net-debts as a percentage of GDP and continues to maintain a solid cash position.
“The 2020-21 deficit is not a structural deficit,” Harpauer said. “It is a pandemic deficit. Saskatchewan will manage through this, because we have the strength, the foundation and the people to do it.”