Finance
October 27, 2016

Prudent Fiscal Management

Province Releases Fall Fiscal and Economic Update

Today the Honourable Cathy Bennett, Minister of Finance and President of Treasury Board, released the province’s 2016-17 Mid-Year Fiscal and Economic Update. The projected deficit has been revised to $1.58 billion, a decrease of $250 million over the Budget 2016 projection of $1.83 billion. As well, the province’s borrowing requirements have been reduced by $500 million.

“We are pleased that we have improved our fiscal performance with respect to our budget targets. We will continue to practice strong fiscal management on behalf of the residents of the province. Our fiscal situation is serious and must be addressed. Our government remains committed to the fiscal targets set in Budget 2016 and to returning to surplus in 2022-23.”
- The Honourable Cathy Bennett, Minister of Finance and President of Treasury Board

Total revenue has improved by $217 million since Budget 2016 and the risk adjustment has been reduced. Oil prices and production have been higher than anticipated; however, volatility remains.

Program savings of more than $110 million have been offset by increased debt servicing expenses of $130 million. These changes are a result of the most current assumptions of pension and post-employment benefits from the province’s actuary.

The Provincial Government’s borrowing requirements for fiscal 2016-17 were estimated at $3.4 billion. The amount has been reduced to $2.9 billion due to higher revenues and deferred cash-flow from infrastructure projects.

“In the near future, the Premier will release a vision document which will provide clear plans for growing the economy and providing quality and more efficient public services while restoring fiscal balance. We will achieve more efficient public sector operations and achieve our deficit reduction targets, eliminate excess and apply an overall approach that ensures all spending decisions are justified on a year by year basis.”
- Minister Bennett

Economic indicators remain on par with budget projections. Despite a slight decline in economic activity since Budget 2016, the province’s population is approximately 3,000 higher than expected.

Oil royalties, which were forecast at budget to be over $500 million, are now projected at over $600 million due to higher than anticipated oil prices and production. Total production is expected to increase to 70 million barrels, or four million barrels higher than the budget forecast. The average price of oil for 2016-17 is estimated to be $45 US per barrel, compared with the budget forecast of $40 US per barrel.

Further information on the 2016-17 Mid-Year Economic Update, including the complete Economic Review, can be found at www.fin.gov.nl.ca.

QUICK FACTS

• The Provincial Government has improved its fiscal performance with respect to Budget 2016 targets. The projected deficit for 2016-17 has been revised to $1.58 billion, a decrease of $250 million over the Budget 2016 projection of $1.83 billion.
• Government remains committed to the fiscal targets set in Budget 2016 and to returning to surplus in 2022-23.
• The 2016-17 borrowing requirements have been reduced by $500 million to $2.9 billion due to higher revenues and deferred cash-flow from infrastructure projects.
• Economic indicators remain on par with budget projections. Despite a slight decline in economic activity since Budget 2016, the province’s population is approximately 3,000 higher than expected at budget time.

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Media contact:

Tansy Mundon Director of Communications Department of Finance 709-729-6830, 693-1865 tansymundon@gov.nl.ca

2016 10 27                              11:15 a.m.