Sask. projects revenue loss of $1B to $3B as province faces 'pandemic deficit'
Finance minister says province will provide 'all financial resources necessary' to combat COVID-19
Saskatchewan's finance minister says revenues could decline by between $1.3 billion and $3.3 billion in 2020-21 as the province faces a "pandemic deficit."
"The 2020-21 deficit is not a structural deficit," Donna Harpauer said Friday. "It is a pandemic deficit. Saskatchewan will manage through this, because we have the strength, the foundation and the people to do it."
Harpauer left revenue projections off her financial update on March 18 — which was originally supposed to be budget day — due to the economic uncertainty caused by COVID-19. Instead, the government only announced its spending plans. Harpauer announced spending of $14.15 billion for 2020-21, but said that number could rise.
On Friday, the province released details of three possible revenue scenarios, based on how long the COVID-19 pandemic affects the province and how low oil prices are.
"It is still incredibly difficult to forecast with any certainty. We believe, however, it is important that we release these different scenarios, to let Saskatchewan people know just how much of an impact the pandemic is having on our economy and revenues," Harpauer said.
Under its three scenarios, the government made assumptions on various economic factors including:
- Duration of emergency measures and public health orders.
- Consumer spending habits.
- Evolving suite of federal support programs.
- Global travel and trade restrictions.
- Success of global monetary and fiscal policy measures.
Harpauer said the province had been on track to announce a budget surplus for 2020-21, but that was scuttled by the pandemic and oil price collapse in March.
The Ministry of Finance said in a statement its real GDP projection is a decline of between 4.1 per cent on the optimistic side and 14.9 per cent on the most pessimistic side.
No discussions yet on reducing province's workforce
The finance minister said revenue is expected to decline in all categories, and she expects spending to go beyond what was outlined in the province's partial budget release, just one month ago.
She was also asked whether the situation called for changes to the province's workforce or its employees' hours.
"There have been no discussions of needing to reduce the public service at this point in time," Harpauer said.
"With each and every budget cycle, we review all of that. And we're going to have to be very mindful of our expenditures going forward. But presently, no."
Premier Scott Moe added that people of Saskatchewan can expect some challenging decisions in the future, but also some positives.
"They can also expect that we will honour the investments that we had tabled in the legislature, we will honour the collective agreements that are most certainly in place," he said.
"They can also expect that this is a government that is going to invest in the strength of the economy as we look ahead over the course of the next number of months and next number of years."
On Wednesday, the Conference Board of Canada released its spring 2020 outlook for Saskatchewan.
It is estimating a five per cent decline in the province's GDP this year.
The conference board report said school closures and social gathering restrictions were necessary but "will hurt economic growth in the near term."
"Employment in the province is expected to fall by 2.8 per cent this year. By industry, we expect to see the largest job losses in the arts, entertainment and recreation, and accommodations and food sectors," it said.
The report expects both GDP and employment to rebound in 2021, by 5.4 and 2.9 per cent respectively.