The drought is negatively impacting provincial coffers according to the Saskatchewan government’s first quarter report. The government says the province’s deficit is up$126.5 million because of the $700 million provided in agricultural support to deal with wide-spread drought conditions.

Higher expenses are offset somewhat by increased revenue from higher than expected oil and potash prices and from higher federal transfers. The result is a forecast 2021-22 deficit of $2.74 billion at first quarter.  However, total expense and revenue cancel each other out with both forecast to be up 5.2 per cent.

Finance Minister Donna Harpauer said, “Recent commitments to help our farmers through the emerging drought, has affected the province’s fiscal situation.” Revenue is forecast to increase from budget by about $757 million. About $360 million of this revenue increase is from non-renewable resources- primarily due to higher oil and potash prices.

Federal transfers are also up by about $401 million from budget, including almost $132 million for early learning and child care, about $124 million for Saskatchewan’s share of the Helping Our Health Systems Recover program and about $63 million in one-time top-up funding for the Canada Community-Building Fund.

Total expense is up about $884 million from budget. Nearly $707 million of that forecast increase is due to pressures in the agriculture sector and includes higher crop insurance expense of about $588 million (bringing the total crop insurance indemnity forecast to $1.1 billion this year), as well as $119 million to help producers maintain breeding stock and address the high costs they face due to drought conditions.

The government says according to private-sector forecasters, Saskatchewan’s real GDP is now expected to grow by 5.6 per cent in 2021 and by 3.8 per cent in 2022.