The province’s new government has released its fall fiscal update, reporting a deficit now near $1 billion and net debt of almost $20 billion.
The Tories had long suspected the financial picture was worse than the former Liberal government was letting on, and it is, albeit somewhat by their own doing.
The deficit now stands at $948 million, up from the last estimate of $626 million, largely due to the removal of $400 million in revenue from the books in the recent tobacco settlement which has yet to be received.
It’s a tangly calculation, but that loss is expected to be offset by higher corporate and personal income taxes, amid signs that the province will lead the pack with five per cent GDP growth next year.
Elsewhere, population growth continues, inflation has slowed, interest rates are down and retail sales remain strong, while the projected price of oil has been lowered to $66 a barrel.
Finance Minister Craig Pardy, meanwhile, repeatedly referenced government’s commitment to lower taxes, safer communities and better health care, saying it’s about “spending smarter,” something critics fear is code for cuts.
But there remains precious few details as to how they’ll get there as the deficit pushes up against $1 billion — incidentally about the same amount it still takes just to service the province’s $20-billion debt.
Government says in the meantime, the province’s economy is performing better than expected. It offers as examples:
- Newfoundland and Labrador is projected to lead all provinces with 5.3 per cent real Gross Domestic Product growth in 2025.
- Employment is expected to remain on par with last year, with 245,600 people employed.
- Household income is forecast to grow by 1.9 per cent largely due to wage gains.
- Housing starts are weaker than in 2024 but remain higher than the 10-year average for the province.
- Both oil and mining production have increased, but capital investment is forecast to decline by 6.3 per cent as major project construction activity has slowed.
- Fisheries and aquaculture have performed well, despite global market conditions.
- Population growth has continued, but at a slower pace as net international migration levels were lower due to reduced federal targets.
- Inflation has slowed and interest rates are lower, down from 2.75 per cent in April to the current rate of 2.25 per cent.
- Retail sales and tourism indicators remain strong.
