November 30, 2010
Minister Provides 2010-11 Fall
The Honourable Tom Marshall, Minister of Finance and President of
Treasury Board, announced today that, given higher-than-expected oil
production and tax revenues, the Provincial Government is now projecting
a surplus for the 2010-11 fiscal year of approximately $12.3 million, an
improvement from the $194.3 million deficit forecast in Budget 2010. The
province’s net debt is now estimated to be $210 million lower than
projected. These are some of the highlights outlined by Minister
Marshall today in delivering the fall update of the province’s finances.
"The updated financial projections for the province indicate an
improvement of $206.6 million, which would bring us back into a surplus
at the end of this fiscal year," said Minister Marshall. "The province
is in a solid financial position, particularly considering the
challenging fiscal situations in which many jurisdictions around the
world find themselves in the wake of the global recession. Our
government set a course and made its way through the downturn, and the
province has maintained a positive economic and fiscal outlook as a
result. However, we must be ever vigilant in managing our financial
resources and our spending in a prudent and sustainable manner."
Provincial revenues overall are now anticipated to be $303.2 million
more than originally projected. Oil-related royalties are expected to be
approximately $65 million higher than the Budget forecast in late March.
This is a result of an additional 12.1 million barrels of oil now
expected to be produced compared to the estimate in March. Revenue gains
from increased production, however, are offset somewhat by lower oil
prices, a higher-than-expected Canadian dollar and increased development
and production costs.
Revenues from corporate income tax and personal income tax are also
projected to be higher than first forecast. Corporate income tax is now
expected to account for almost $165 million more in revenues than
forecast in March, with approximately $120 million of this associated
with the offshore industry. Personal income tax revenues are estimated
to be more than $31 million higher.
Total expenses have increased by $96.6 million due primarily to
unforeseen expenditures related to Hurricane Igor, as well as
adjustments to pension expenses resulting from changing actuarial
"Oil prices and production levels, the exchange rate for the dollar,
as well as other factors affecting the province’s finances, are
volatile, and can and do change," said Minister Marshall. "We must stay
mindful of that reality, particularly given the ongoing economic
uncertainty in the U.S. and around the world."
Following the effects of the recession in 2009, the province’s
economy has not only resumed growth this year, but real GDP is expected
to expand by 5.4 per cent to lead all provinces. Labour markets have
also rebounded, with employment on the rise and the unemployment rate
resuming its downward trend.
"Newfoundland and Labrador’s economic growth is expected to lead the
country this year, driven by strong capital investment and increased
mineral and oil production," said Minister Marshall. "Our government is
continuing to strengthen the province’s fiscal capacity by diversifying
and growing the economy. As a result of our strategic investments and
sound financial management, Newfoundland and Labrador has a firm
foundation in place."
A copy of the fall financial update can be found at:
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Director of Communications
Department of Finance
2010 11 30 1:30 p.m.