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Yahoo
03-07-2025
- Business
- Yahoo
With an eye to Saskatchewan's growing debt, expert sees 'stormy weather ahead'
That the Saskatchewan government posted yet another deficit is of no surprise to economics professor Keith Willoughby, but he says a critical eye reveals some trouble brewing on the horizon. On Monday, the government published its 2024-25 Public Accounts Volume 1, which details the province's finances and indicated a $249-million deficit, down from the $273 million-deficit projected in March. Willoughby, Dean of the Edwards School of Business at the University of Saskatchewan, had three major take-aways after reading it: the deficit is to be expected, the province is doing well compared to other jurisdictions but the increasing net debt per capita and net debt to the province's growth domestic product (GDP) needs to be addressed. 'I believe that there is some stormy weather ahead to which the province needs to pay special attention,' he said in an interview Wednesday. Net debt per capita is effectively a figure reached by taking the net debt carried by the province then dividing it by every single resident of the province. According the government's public accounts, each citizen is carrying a provincial debt burden of $12,500. 'If you look back a decade ago, it was about $7,000 per man, woman and child in the province,' said Willoughby. 'That speaks to some challenges that the province will need to address as we go forward.' Net debt per capita peaked in 2022 at $13,100 per citizen but the statistic is now trending up again. Coupled with a year-over-year uptick in net debt to the province's GDP coming in at 13.7 per cent, he said there are some headwinds being faced. Saskatchewan is still in a relatively good position compared to other provinces, with Manitoba's net debt to GDP forecast at 36.1 per cent in 2024 and Alberta's forecast at 7.6 per cent. 'How large do you want the debt to grow? Because if it gets unsustainable, in terms of the GDP or the people in the province, that puts the burden back on the taxpayers and citizens of this province,' he said. In an emailed statement, the government touted its position as the province with the second-lowest net debt to GDP in Canada. 'The Government of Saskatchewan continues to make investments that deliver on what the people of Saskatchewan have said is important to them – affordability, health care, education, community safety and fiscal responsibility,' read the statement. But not all debt is made equal. Spending on infrastructure, health care, education, etc. are touched on in the accounts document but for Willoughby, citizens should take stock of how the government's spending is impacting them in their day-to-day lives. 'Are we getting access to better services? Are our health-care wait times dropping? Are the roads improved? Are we seeing access to better services in terms of teacher contracts?' he said. When the province released its 2025-26 budget in March, a slim surplus of $12.2 was forecast. Oil trading well below projections, wildfire expenses, suspensions of the provincial output based carbon pricing regime and increased drought pressure throughout the province are all making the likelihood of that surplus low, argued NDP finance critic Trent Wotherspoon. According to the province, total revenues in 2024-25 were $20.9 billion, up $994 million from targets, in part due to $400 million from a national tobacco settlement. At the same time, expenses came in at $21.1 billion. Wotherspoon said without the settlement the deficit would have been $600 million, adding the province 'squandered' the settlement. 'They overspent by a billion dollars, they failed to balance the budget and failed to properly address the real, big challenges that Saskatchewan people face,' he said at a media availability Wednesday. Wotherspoon also took issue with the timing of the release of public accounts, which happened the day before the Canada Day holiday. He likened it to the recent release of Crown earnings reports. Historically, they are released in a staggered manner over the course of an entire week with opportunities for technical briefings and interviews with media at the legislative building. This year, all the reports were simultaneously on June 23 in Saskatoon. 'They don't like accountability, they don't like scrutiny,' said Wotherspoon. Scott Moe pauses Saskatchewan carbon tax, promises balanced budget despite $431.5M revenue loss 2025-26 Sask. budget: Province forecasts $12.2M surplus, no contingency fund for Trump's U.S. tariffs alsalloum@ The Regina Leader-Post has created an Afternoon Headlines newsletter that can be delivered daily to your inbox so you are up to date with the most vital news of the day. Click here to subscribe. With some online platforms blocking access to the journalism upon which you depend, our website is your destination for up-to-the-minute news, so make sure to bookmark and sign up for our newsletters so we can keep you informed. Click here to subscribe.
CBC
12-05-2025
- Business
- CBC
Lower-than-anticipated oil prices put Sask.'s budgeted revenues at risk
Each $1 drop in oil prices costs Sask. $17.9 million Oil prices have been trending downward since the start of this year, from $80.04 US/ barrel in January to as low as $58.07 US/ barrel last week. That puts millions of dollars of Saskatchewan oil revenues in jeopardy. Saskatchewan projected its oil revenue in the province's March budget based on an average price of $71 US a barrel. Since then, oil prices have hit or surpassed that number only twice. Oil and natural gas revenue were budgeted to make up for 5.1 per cent of the total money coming in for the province. The budget says each $1 difference from that $71 mark costs the province $17.9 million dollars in oil revenue. As of Monday, this year's fiscal average was $62.23 US per barrel. As per the budget, that's more than $156 million less in estimated revenue coming into Saskatchewan. Keith Willoughby, dean of Edwards School of Business at the University of Saskatchewan, said these numbers could be early warning signs for the province. "This is an $18-million [per dollar] headache for the government of Saskatchewan," he said. "That's a considerable impact on the provincial budgetary landscape." It's only been a little over a month since the fiscal year began, and present estimates could change if prices increase or decrease over the year. Willoughby said it's a little early to toss the budget out completely, given that increased summer driving could potentially push the prices of gasoline and oil upwards. "If we were to maintain a $71-a-barrel price for oil, we'd have to have prices close to $80-a-barrel for the next several months. So to me it will be important to identify what happens over the next one to two months," Willoughby said. Joe Calnan, vice-president of energy and Calgary operations at the Canadian Global Affairs Institute, said a weaker-than-expected demand and a higher-than-expected production is causing the prices to drive down. "I'm trying to keep a handle on the whole thing, but, very interesting time to be watching the oil market," Calnan said. OPEC+, a group of major oil-exporting nations, has loosened supply constraints to bring more oil onto the market. Calnan said that move accelerated oil supply, while the trade dispute between US and China compounded the issue by lowering demand. "We're seeing quite a bit more oil coming on to the market far sooner than anticipated, and this hasn't come at the perfect time, as we are now seeing probably expectations of lower demand," he said. The average per-barrel price for the last fiscal year was $74.38 US. Willoughby said it would've been tricky for the province to have anticipated an accurate per-barrel price in tumultuous times where governments are left navigating tariffs, OPEC+ decisions and trade policies coming out of the White House. "It might have been challenging for the government to anticipate, maybe, the impact of the tariff turbulence and some of the softening of demand we're seeing. These situations are always better viewed in hindsight." Willoughby said it might be important for the government to send out communication to Saskatchewan residents about revised estimates and how they'll impact people. The province's projected a razor-thin surplus of $12.1 million, but it didn't factor in any fallout from American or Chinese tariffs, including a 100 per cent tariff on canola imports. Saskatchewan's approach was a departure from budgets in Alberta and B.C., which each featured dedicated contingency funds of $4 billion. Instead, the province banked on a strong financial outlook and "responsible" spending to weather the impacts of tariffs. Willoughby said the decision to not have a contingency could prove detrimental. "We went into the situation with no backup goalie. There was no safety net, there was no limited contingency plan. So it's sort of, like, now our first string goalie got injured and so now we are dealing with some of the repercussions." Saskatchewan's Ministry of Finance, in an emailed response, said the provincial budget oil price forecast is established using "a multitude of expert private sector oil price forecasts at the time the budget is finalized, typically around mid-February." "As we are just over a month into the fiscal year, it is too early to know what the impact of the change in oil prices is going to be. It is common for the oil price to fluctuate up and down over the course of a year," the ministry said.
