The Keystone Pursuit of Balance: Our Analysis of the Manitoba Budget 2024

Key Insights

The Manitoban economy will weaken in 2024 before strengthening in 2025. Budget 2024-25 depicts a similar economic situation for the province compared to our latest provincial forecast. An array of new programs were put in place by Wab Kinew’s NDP government to help Manitoba mitigate some of the risks that could result in a severe downturn. The budget acknowledges that there is a great deal of uncertainty surrounding inflation, supply chain disruptions, geopolitical tensions, and environmental events. However, various initiatives, including a $146.9 million investment in business risk management programs, will help lighten the blow relative to other provincial downturns. In 2024, the province’s 0.6 per cent gain in real GDP is 0.3 percentage points more favourable than our own, but we do expect a stronger bounce back in 2025 at 2.7 per cent, compared to the province’s 1.9 per cent outlook.

Broad-based policies to meet election promises. There were no shortages of new program announcements in this budget, unlike most other budgets across the country. Many of the promises are a result of the NDP’s election campaign promises. Healthcare was a major area of focus and is mostly built around increasing capacity through higher staffing levels, additional training, and more capital investment. There is also money earmarked to helping support remote and indigenous communities. Despite the focus on healthcare, there was no shortage of spending programs across other ministries, including many tax credits. In all, spending growth remains reasonable, as total expenditures are only increasing by 2.8 per cent in fiscal year 2024-25 compared to the latest forecast for fiscal year 2023-24. This matches up favourably to a 9.1 per cent increase in total revenues.

The plan to balance is there, but fiscal indicators show little improvement. Manitoba already had a high net-debt-to-GDP ratio, which worsened as a result of a near $2.0 billion deficit in fiscal year 2023-24. A modest increase in capital spending, which is elevated compared to recent norms, coupled with deficits over the next three fiscal years, implies that net debt as a share of GDP will increase over the next two fiscal years, and remain well above fiscal year 2022-23 levels through the end of the planning period in fiscal year 2027-28. This comes while federal transfers as a share of revenue and debt servicing costs remain elevated. The province has struggled to reach surplus for nearly two decades, and while the plan to balance is there in this budget, it is a long way out, and the path toward improving fiscal indicators remains cloudy.