Provincial Government Releases Fiscal Update #nlpoli

Finance Minister Tom Osborne released a fiscal update on the 2019-20 fiscal year on Thursday.

The Provincial Government held expenses steady with a reduction of $35 million from the original projection. Government’s borrowing requirements also remained unchanged at $1.2 billion from the Budget 2019 projection.

Revenue projections for 2019-20 decreased by $690 million, driven by a year of unprecedented challenges:

  • Reduced oil prices due to the oil price war between Saudi Arabia and Russia, a lower than anticipated Canada to US exchange rate, shutdowns of Hibernia and the Terra Nova FPSO and other production changes resulted in $181 million of lower oil royalties than projected at Budget;

  • Deferral of $108 million tax portion of the Atlantic Accord agreement based on consultation with the Auditor General;

  • $203 million net reduction in provincial taxes; and

  • $198 million net reduction in other provincial, federal and related revenues (including entities and government business enterprises).

The province also faced significant disruptions due to the January snowstorm event and COVID-19 measures implemented in mid-March, which combined to shut down Newfoundland and Labrador’s economy for three weeks in 2019-20.

As a result, the province’s surplus for 2019-20 is revised to $1.27 billion, a reduction of $287 million from the Mid-Year Update estimate.