The Honourable Tom Osborne, Minister of Finance and President of Treasury Board, today released the province’s annual Fiscal and Economic Update, which provides a snapshot of the province’s fiscal situation at the midway point of the fiscal year ending March 31, 2020.

Government has maintained course in the areas it can control. Expenses have held steady, with a reduction of $24 million from the original projection. Government’s borrowing requirements are also unchanged at $1.2 billion from Budget 2019.

Revenue projections have decreased by $393 million, driven by several factors outside government’s control:

• Shutdowns of the Hibernia project in July and August caused an estimated deferral of $185 million in revenue for this fiscal year;
• The impact of lower than anticipated oil prices is expected to reduce revenues by $46 million;
• The remaining variance is mostly due to revised tax estimates and changes to payment methodology from Finance Canada, as well as adjustments to federal cost-shared programs and infrastructure projects.

As a result, the province’s projected surplus for 2019-20 is revised to $1.56 billion, a reduction of $368.7 million from the original Budget 2019 estimate.

Despite these issues, several economic indicators remain strong. Real gross domestic product is expected to increase by 3.1 per cent, and while this is a reduction of 1 percentage point from the original Budget projection we are still leading the country in this indicator. Capital investment is forecast to increase 3.1 per cent to $9.4 billion in 2019 and by 4.9 per cent to $9.8 billion in 2020. The unemployment rate is expected to average 11.8 per cent in 2019, down from the 13.1 per cent forecast at budget time.

Quote
“We have achieved significant cost control in the face of numerous pressures, but the revenue challenges presented today show once again the volatility of oil revenues, and the limitations of current federal programs meant to overcome shifts common in resource producing provinces. We are continuing to work with the Federal Government on solutions, and we hope that commitments for collaboration from opposition parties are genuine as we work to overcome the challenges we face.”
Honourable Tom Osborne
Minister of Finance and President of Treasury Board

– 30 –

Learn more
2019-20 Fiscal and Economic Update

Follow us on Twitter: @GovNL   and @FIN_GovNL

Media contact
Marc Budgell
Finance
709-729-2477, 689-0430
marcbudgell@gov.nl.ca