The Conference Board of Canada recently released its Saskatchewan Fiscal Snapshot – ‘Saskatchewan’s Balancing Act’’. Economist and author, Daniel Fields offers the following insights on the report:
“After the collapse in oil prices resulted in a $1.5 billion deficit in fiscal year 2015-16, tax increases and spending cuts have allowed Saskatchewan to reduce their budget shortfall to just $300 million. If the government can stick to its stringent spending plan the province should be able to achieve a balanced budget on schedule in 2019–20.”
—Daniel Field, Economist, The Conference Board of Canada.
- Saskatchewan is entering its fourth year of deficits since the collapse in oil prices threw the province’s economy and finances into a tailspin. While net debt has nearly doubled over this period, the province remains in good financial shape.
- In addition to the recent tax increases, the government will have to continue to keep spending below inflation to balance their books in 2019-20.
- While the Conference Board expects the province can achieve its target of a balanced budget, the government’s spending targets will be challenging to achieve.
- Current spending targets are well below what is required to keep up with the underlying pace of demand. To keep pace with underlying demand, the Conference Board expects health care costs would need to rise by an average annual rate of 4.4 per cent over the next three years.
- The elimination of the deficit could be delayed if the government does not adhere to its spending plan or weaker-than expected oil revenues.