While most of the attention on government spending to help people and businesses cope with the COVID pandemic has focused on Ottawa, the provinces are going to feel the pain too.
Saskatchewan, according to a ScotiaBank report, has earmarked less than any other province for direct aid but the provincial treasury is still going to take a hit because of lower revenues. Declining royalties, lower income taxes and reductions in sales tax will no doubt hit the government’s top line. And, while it is too early to know just how much of hit, a forecast from RBC sees it starting to take shape.
They project all provinces will see deficits rise by $63 billion this year. Saskatchewan will account for $1.5 billion or two-percent of our GDP. That is almost the best case scenario in the country. And we’ve seen much worse. Back in the mid-80s the deficit hit nearly seven-percent of GDP or three times what the forecast is expecting for this year.
At the current pace, a year from now, RBC says Saskatchewan will have the most favorable debt-to-GDP ratio of all the provinces.