A local economist says federal help will be needed to keep Newfoundland and Labrador afloat after the COVID-19 pandemic.
While the province joins the rest of the world in working to contain the spread of the illness, the economic impact of the pandemic continues to loom.
Memorial University Economist, Dr. Wade Locke says this province was in a difficult fiscal position, even before the outbreak.
We had the highest per-capita debt in the country, prior to the pandemic, the highest expenditures, and if it wasn’t for the $2.5-billion from the Atlantic Accord in 2019, we would also have had a “huge deficit” this year according to Locke.
Locke admits that economics are often seen as the “dismal sciences” but the current situation will magnify the problem we were already facing, especially with the collapse of world oil prices. The price of oil has fallen from the budget estimate of $65 per barrel to less than $30.
A number of royalties in place are sensitive to price including part of the royalties from the Hibernia, White Rose and Hebron projects, which only kick in after the price hits $50 a barrel.
Locke says just about every jurisdiction is in a better position to weather the storm than Newfoundland and Labrador. He says the only real way out will be with the help of the federal government.
He doesn’t think the province can survive this without help from the federal government. He says if Finance Minister Tom Osborne can get the federal government to buy into support for Newfoundland and Labrador, then he should do it.
