Finance Minister Donna Harpauer. (Lisa Schick/980 CJME file photo)

By CKOM News Staff

Sask. first-quarter budget update projects deficit of $2.1B in 2020-21

Aug 27, 2020 | 11:59 AM

The Government of Saskatchewan is projecting a $2.1-billion deficit for 2020-21 in its first-quarter budget update.

That’s $296 million better than was predicted in the provincial budget released in June. At that time, the government said it expected to face a $2.4-billion deficit resulting from the economic impact of COVID-19.

In a media release Thursday, the province also forecast a return to balance by 2024-25.

The update predicted deficits of $1.4 billion in the 2021-22 fiscal year, $855 million (in 2022-23) and $340 million (2023-24) before 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,” the release said.

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Saskatchewan recorded a deficit of $319 million in the 2019-20 fiscal year.

The June budget said Saskatchewan’s economy was expected to shrink by 6.3 per cent in 2020, but the first-quarter update now predicts a 5.5 per cent decline.

It also says the province’s economy should have a real GDP growth of 4.5 per cent in 2021.

“Saskatchewan’s fiscal foundation is solid and our province’s economy and economies around the world continue to reopen and recover,” Finance Minister Donna Harpauer said in the release.

“We have seen positive signs in recent months but we are aware that certain sectors and industries continue to face significant challenges.”

According to the first-quarter update, revenue is to be $14.05 billion in 2020-21, up $398 million from the budget. The government said that’s due largely to $338 million in federal funding as well as a $56-million increase in resource revenue.

The province already has announced it will be shifting $40 million of its $200-million contingency fund to help school divisions prepare for a return to classrooms in the face of COVID-19.

The update said expenses are forecast to be $16.18 billion in 2020-21, an increase of $103 million from the June budget. They include increases of $72 million for the health system, $70 million for municipalities and $35 million for the tourism industry.

The first-quarter update says public debt is expected to decrease $455 million from the budget due to the change in the deficit forecast and lower Government Business Enterprise debt.