Finance Minister Donna Harpauer revealed the province's first-quarter financial report on Aug. 31, 2023. (Lisa Schick/980 CJME file photo)

By CJME News

FISCAL UPDATE

Saskatchewan projects surplus of $485M at first quarter, down from $1B at budget

Aug 31, 2023 | 12:15 PM

The Saskatchewan government is forecasting a surplus of $485.5 million in its first-quarter financial report, down more than half a billion dollars from budget.

In a media release Thursday, the government said the decrease of $532 million from budget was due to higher non-cash pension expenses and spending to fight wildfires and safely evacuate those impacted by the fires. Lower resource revenues than were forecast in the budget also were a factor.

Even so, the government says it’s still on target to retire up to $1 billion in operating debt.

“Saskatchewan’s finances continue to be in a strong position, with a substantial surplus,” Finance Minister Donna Harpauer said in the release. “The forecast, however, clearly demonstrates the need to be prudent and manage spending carefully, as resource revenue is volatile and forecasts can change quickly due to global impacts on prices and production.”

The government said the revenue at first quarter is forecast to be $19.6 billion, down $123.7 million from expectations in the budget.

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The decrease is largely due to a reduction of $528.9 million in the non-renewable resources revenue forecast. The government said that decrease was caused by lower potash and oil prices, and lower-than-budgeted potash and oil sales forecasts.

According to the report, potash revenue fell by $317.2 million, mainly due to lower prices (a decrease of US$30.6 from budget), lower-than-budgeted sales volumes and higher operating costs. As well, oil and natural gas revenue is projected to fall by $42.9 million.

However, the release noted, that decrease in resource revenue was offset by a combined increase of $405.2 million across all other revenue categories, including taxation revenue. The government said that was caused by “ongoing strength in consumption and, as a result, Provincial Sales Tax revenue.”

The expenses at the first-quarter mark were forecast to be $19.1 billion, up $408.2 million from budget.

The government said there was an increase of $317.2 million in education, general government and finance charges, due largely to a non-cash increase in pension expense. The government also paid $89 million more than expected to fight wildfires and to safely evacuate those impacted by the fires.

“Sticking with our debt reduction plan is important, because paying down up to $1 billion in operating debt this fiscal year, combined with $1.5 billion in debt retirement last fiscal year, is resulting in projected annualized interest savings of $110 million — savings that go directly into supporting priority programs, services and infrastructure for Saskatchewan people,” Harpauer said in the release.

The government said its net-debt-to-GDP is projected to be 13.4 per cent at the end of 2023-24, which currently is ranked second among the provinces.

The release said private-sector forecasters were projecting that Saskatchewan’s real GDP is expected to grow by 1.8 per cent in 2023, the second-highest such figure among the provinces, and by 1.2 per cent in 2024, which would be third among the provinces.