Saskatchewan is facing a projected deficit of $250 million for the current fiscal year, according to the provincial government’s mid-year financial report.
The report released on Monday highlighted increased expenses of $1.3 billion, driven primarily by the summer drought’s impact on agriculture and a decline in projected resource revenues.
In a press conference, Finance Minister Donna Harpauer said that the drought led to a 20% reduction in production, triggering higher crop insurance payouts and an additional $853 million allocated to agriculture.
Harpauer also pointed to a decrease in forecasted potash revenues, highlighting how the invasion of Ukraine by Russia has impacted commodity prices and production levels.
Despite sanctions, potash from Russia and Belarus continued to flow into key markets like China and India, according to Harpauer.
“We rely totally on the forecasts of the industry themselves,” the minister said. “So, I don't think they were certain when the market would return to Russia and Belarus.”
While acknowledging the potential for drier years ahead, Harpauer additionally stated that there are no immediate plans to increase the agriculture budget.
She said the province remains committed to ongoing projects with no reduction in capital spending. She also acknowledged that some projects might experience delays, but she emphasized the flexibility of the budget.
Saskatchewan’s mid-year report also forecasted increased spending in other areas, including $111 million for wildfire-fighting efforts, $270.7 million for education, and an additional $45.3 million for pension inflation adjustments.
Looking ahead, Harpauer hinted at the likelihood of no tax cuts in the upcoming spring budget. She underscored positive economic indicators such as the province’s growing GDP and a low unemployment rate of 4.4%, which falls below the national average of 5.7%.
“People are looking for jobs and opportunity,” she said. “Even though there are inflationary pressures, when you look at taxes, utility and housing costs, we're the most affordable in the country.”
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