December 7, 2009
2009-10 Fall Financial Update
Today, the Honourable Tom Marshall, Minister of
Finance, released the 2009-10 fall financial update.
The Provincial Government is now forecasting a
deficit of $443 million, an improvement of $307 million
as compared to a $750 million deficit forecast in Budget
2009. Strengthening oil prices is the primary reason for
the progress during the year. Program expenses have
increased to deal with extraordinary circumstances,
including response to the closure of the mill in Grand
Falls-Windsor. The projected deficit can be
predominately attributed to the
Federal Government’s elimination of benefits under the
1985 Atlantic Accord.
"The last year has been uncertain from a global
economic perspective and while the volatility of the
markets and the exchange rate continues to present
challenges for the country, our government is well
positioned to manage its way through the downturn and
the recovery," said Minister Marshall. "We have taken an
aggressive approach to lower taxes, pay down the debt,
lower borrowing costs and have made strategic
investments in programs and infrastructure in order to
stimulate the economy and provide jobs for our people.
This plan, led by Premier Williams, is working and has
allowed our province to navigate the economic challenges
better than most. Consumer confidence is high, housing
starts are robust and housing prices are 18 per cent
higher than last year."
Newfoundland and Labrador has not been immune to the
impacts of the global recession. Industries, such as
mining, fishing and forestry, have all been affected.
The gross domestic product (GDP) is expected to decline
8.5 per cent this year, due to lower mineral, newsprint
and fish production, as well as natural declines in oil
production. GDP growth is expected to resume next year
as the worldwide recession ends. An anticipated rebound
in mineral production and increased construction
activity on major projects is expected to result in
positive GDP growth in 2010.
The Williams Government previously implemented a
multi-year infrastructure strategy which laid the
foundation for Newfoundland and Labrador to navigate
through the period of economic decline experienced this
past year. In Budget 2009, the Provincial Government
bolstered this strategy through an additional and
unprecedented investment of approximately $800 million
in infrastructure projects. This includes investments in
roads, hospitals, schools, long-term care facilities,
ferries and waterbombers. Approximately 75 per cent of
these projects have been tendered and awarded to date.
Since forming government in 2003, more than 80 per cent
of infrastructure expenditures have been in rural
Newfoundland and Labrador.
"After years of neglect, new facilities were needed
and others were in need of repair," said Minister
Marshall. "Not only have we substantially increased
infrastructure spending, we have invested in new
programs and improved services to meet the changing
needs of our residents. Now, with that strong foundation
in place, we must continue with our plan of prudent
fiscal management to provide long-term stability."
The fiscal management practices put in place by the
Williams Government have provided for significant
progress in debt repayment, lower borrowing costs, lower
taxes and an improved provincial credit rating. The
province has reduced net debt from almost $12 billion to
less than $8 billion at the end of 2008-09. On a per
capita basis this reduced the amount of debt per person
from $22,974 to $15,733.
Net debt at the end of 2009-10 is expected to be $8.6
"Financial experts and credit rating agencies
continue to reaffirm that our plan is working and we are
making significant progress," said Minister Marshall.
"As a government, we cannot alter from this course,
especially as the world recovers from the worst
recession since the Depression. While we must recognize
our achievements, we must also continue to take a
responsible and cautious approach to our investments and
planning. We had unprecedented surpluses in the past
that helped us become more self-reliant. However, the
current global economic uncertainty dictates that we
moderate our expectations to ensure our spending of
public money is sustainable into the future."
A copy of the fall financial update can be found at: www.gov.nl.ca/fin/2009-10update.htm
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Director of Communications
Department of Finance
2009 12 07 11:10 a.m.