Bond rating agency Morningstar DBRS says elevated oil prices are an upside to the provincial government’s efforts to address its ongoing deficit and rising debt.
The bond rating agency says this week’s budget centered on the provincial government’s campaign promises.
With a weaker-than-anticipated deficit of $729 million over the last fiscal year, government is forecasting a deficit of $688 million for the upcoming year.
That equates to 1.4 per cent of GDP.
Over the medium term the province is now anticipating deficits of $1.1 billion from 2027-28 through to 2029-30 before improving to a deficit of $835 million for 2030-31.
The previous government was expected to return to balance by 2026-27 and remain balanced after that.
The province is projecting oil at US$ 79 per barrel – the current price of oil is at US$ 115 a barrel.
Morningstar DBRS says the longer those prices remain elevated, the greater the likelihood that the NL deficit is “notably reduced.”
The bond rating agency also notes that “it remains highly uncertain if NL will realize the fiscal and economic benefits previously anticipated” through the MOU with Quebec on the Upper Churchill.
