The Honourable Tom Osborne, Minister of Finance and President of Treasury Board, today released a fiscal update on the 2019-20 fiscal year. This update provides an overview of the province’s fiscal situation as of March 31, 2020 as well as a look at the ongoing challenges presented by COVID-19 and low oil prices.

The Provincial Government continued its record of rigid cost-control, holding 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.

It is anticipated that government will continue to see a reduction in revenues such as Personal Income Tax, Harmonized Sales Tax, deferred or waived fees, and other measures as a result of health restrictions put in place to protect the public during COVID-19.

Furthermore, to date, the average price of oil in 2020-21 is just over $24 US per barrel, and oil revenues are expected to be significantly lower than in 2019-20.

It is government’s intention that Budget 2020 will be delivered before the interim supply period concludes on September 30, 2020.

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“2019-20 was a difficult fiscal year for Newfoundland and Labrador, and we face ongoing challenges with COVID-19. As we look toward Budget 2020, our response is going to require a measured and strategic approach on how we work with the Federal Government, on how we work with businesses and more.”
Honourable Tom Osborne
Minister of Finance and President of Treasury Board

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Marc Budgell
Finance
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