The provincial government is forecasting a deficit of $2 billion dollars. That’s actually an improvement by $86 million from the first quarter. and a total improvement of $382 million from budget. In its mid-year report, the government predicts revenue at $14.2 billion at mid-year. That’s a $504 million increase from budget. The government says that is largely due to higher federal transfers and Government Business Enterprise net income.
Tax revenue is $41 million lower than budget estimates which the province says reflects the government’s commitment to reduce the small business Corporate Income Tax rate that went into effect October 1st.
Expense is projected at $16.2 billion. That is $122 million higher than budget. Public debt is projected $23.8 billion. That is a $541 million decrease from budget. The province says its planned return to balance in 224-25 remains unchanged.
Saskatchewan real GDP is currently forecast to decline by 5.0 per cent in 2020. In 2021, real GDP is forecast to rise 3.4 per cent. The global pandemic is not far from the minds of fiscal planners. The province says that it continues to weigh heavily on the economic and fiscal outlook for governments around the world. As well, the recent resurgence of the virus and stricter public health measures threaten the current pace of global recovery, and the longer-term impacts of the pandemic are still unfolding. Nevertheless, the government says that Saskatchewan remains well positioned to respond to the challenge.
In its mid-year report, the province says that Saskatchewan has suffered a double hit of a pandemic and a fall in oil prices. Job losses earlier this year were unprecedented. In a two month period, employment fell by over 70 thousand. However, employment rebounded in May as businesses began reopening. As of October, the government says total employment in the province was slightly lower than January figures, and Saskatchewan’s employment rate was the highest in Canada.
But the recovery has been uneven across industries. In accommodation and food services, employment in October was still well below pre-pandemic levels. Employment in construction and wholesale and retail trade, however, rebounded relatively quickly following the shutdowns earlier this year.
The oil sector took a particularly hard hit with the drop in oil prices from reduced global demand. Year-to-date drilling in Saskatchewan is down 43 per cent and oil production is down 9.5 per cent. The government says that crop production is off about 3.5 per cent, based on the latest Statistics Canada estimates.
Saskatchewan is one of just two provinces to show positive growth in international goods exports so far this year. Exports are up 1.7 per cent. Although retail sales are down 3.3 per cent through the first eight months of the year, It’s better than expected at first quarter. Potash production is anticipated to increase 5.4 per cent. Housing starts are up 30.2 per cent, by far the largest percentage increase among provinces.
