Saskatchewan Finance Minister Donna Harpauer. (Britton Gray/980 CJME file photo)

By CKOM News

provincial finances

Drought has big impact on Saskatchewan’s mid-year financial forecast

Nov 29, 2021 | 10:31 AM

Some of Saskatchewan’s finances have dried up thanks to the drought that hit the province in 2021.

In its mid-year financial report released Monday, the Government of Saskatchewan forecast a deficit of $2.71 billion, up $97 million from the budget but down $29 million from the first quarter.

One of the biggest impacts on the province’s financial health was the drought.

“The drought was unforeseen and farmers were hit hard this spring and summer,” Donna Harpauer, the province’s deputy premier and finance minister, said in a media release Monday. “Our government is here to provide support to Saskatchewan people when they need it.

“Absent the drought, we would have seen a significant improvement from budget and a much lower deficit, based on stronger revenue across all major categories.”

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According to the mid-year report, the province is facing $1.8 billion for crop insurance claims, bringing the total indemnity forecast to $2.4 billion. There also was $292.5 million in support for livestock producers affected by the drought.

The government also is spending $101 million over budget due to the COVID-19 pandemic and wildfires that ravaged the province.

Health expenses are expected to increase by $250 million over budget due to the pandemic as well as pressures on the Saskatchewan drug plan.

Total expense is forecast to be up $2.5 billion from the budget, to $19.577 billion. Revenue is forecast at $16.869 billion, $2.4 billion over budget.

The increase in revenue includes hikes in resource revenue (up nearly $669 million due to higher oil prices and potash prices) and taxation revenue (an increase of $617 million due to higher income and sales tax revenues).

“We are seeing indications, in many aspects of our economy, of a return to pre-pandemic strength in Saskatchewan even as the pandemic persists,” Harpauer said.

The province also received increased transfers from the federal government of $542.6 million over budget. The majority of those funds were for drought, pandemic, child care and municipal infrastructure funding.

The mid-year report says the province’s real GDP is forecast to grow by 3.6 per cent, up from 3.4 per cent at budget. In 2020, the real GDP fell by 4.9 per cent.

“Saskatchewan has the highest growth in manufacturing sales and the second-strongest growth in housing starts in the country so far this year,” Harpauer said. “We are seeing many economic indicators trend up.”

Employment in the province has risen by 13,730 jobs so far in 2021 compared to the same time period last year. Saskatchewan’s employment rate of 62.6 per cent so far this year is second-highest among the provinces.

The public debt is expected to be $27.833 billion, up $66 million from budget but down $24 million from the first-quarter forecast. The province’s net debt is forecast to be $16.7 billion as of March 31, 2022, down $871 million from budget predictions.

-More to come.

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