REGINA -- The Government of Saskatchewan predicts the COVID-19 pandemic will result in a potential revenue decline of $1.3 billion to $3.3 billion.
The province says the decline will depend on the length of economic restrictions due to the pandemic.
The Ministry of Finance says it used three different scenarios to estimate the economic impact.
“We are less than three weeks into the new fiscal year and right now we just don’t know how long restrictions will remain in place in Saskatchewan, in Canada and around the world,” Finance Minister Donna Harpauer said in a news release. “That’s why it is still incredibly difficult to forecast with any certainty. We believe however it is important that we release these different scenarios, to let Saskatchewan people know just how much of an impact the pandemic is having on our economy and revenues.”
Premier Scott Moe called the pandemic's impact “unprecedented for our generation.”
“Right now, almost everything is out of our control. The responsibility we need to take is in the recovery,” Harpauer said at the province’s daily update on Friday. “We want to make sure there are jobs to come back to when this is over.”
Three economic scenarios
The ministry says the three scenarios include assumptions on duration of current economic restrictions, how soon resource prices will recover and anticipated customer behaviour when restrictions are lifted.
The Real GDP scenarios for this fiscal year are all negative, ranging in declines from 4.1 per cent under the most optimistic scenario to 14.9 per cent under the most pessimistic scenario.
The province says it’s still managing spending under the numbers released in the scaled-back spending forecasts on March 18.
In March, Harpauer said the province had $1.3 billion in cash flow from a fund put into place two years ago to maintain a liquidity level in Saskatchewan. She said Friday that money is still there and will be used for payroll and cash flow going forward.
“Our government has committed to provide all financial resources necessary to address the COVID-19 pandemic, and this will likely result in spending increases beyond the amounts allocated in the 2020-21 estimates,” Harpauer said.
Moe added he will be working with the federal government to continue investing in Saskatchewan’s economy.
“This is a government that is going to invest in the strength of this economy,” he said. “Ultimately it will support the hard-working people in community after community in Saskatchewan.”
“As we recover from this pandemic, this government has faith that the economy in this province will rebuild.”
Pandemic deficit
“The 2020-21 deficit is not a structural deficit,” Harpauer said. “It is a pandemic deficit. Saskatchewan will manage through this, because we have the strength, the foundation and the people to do it.”
According to Harpauer, the province has maintained “strong management” of its finances, which should provide a “solid fiscal foundation” during the pandemic and its recovery.
Saskatchewan was on track for a surplus this year prior to the pandemic and oil price collapse, Harpauer said. The province tabled a balanced budget last year.
“The foundation of our budget is solid. Our revenues surpass our expenses,” Harpauer said. “When the economy recovers, then we will be back in a position where our revenues surpass our expenses."
However, Harpauer said it will take some time to return to balance following the pandemic.
“It’s a significant deficit,” she said. “It will take a couple of years to return to that balance.”
Earlier this week, Moody’s Investor Service announced Saskatchewan had maintained its AAA credit rating. The Finance Ministry says Saskatchewan has the second-highest credit rating in Canada.
Harpauer said the province will need to borrow due to the lost revenue, but will have low interest rates.
“The difference we’re going to see in Saskatchewan is the strength we had going in,” she said. “The structure of our finances is strong.”
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