UPDATE 1-Canadian province Saskatchewan sees wider deficit as oil prices fall

Mon Feb 29, 2016 2:48pm EST
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(Adds details on oil and potash price estimates, further forecasts)

Feb 29 (Reuters) - The resource-rich Canadian province of Saskatchewan said on Monday that its projected budget deficit would be larger than previously estimated, boosted by a drop in oil prices that trimmed government revenues.

The province's 2015/16 shortfall, its first in two decades, will reach about C$427 million ($315.8 million), up sharply from C$262.2 million forecast in November. The fiscal year runs from April through March.

Canada's biggest wheat-growing province expects to return to a surplus by 2017/18, after running a smaller deficit next year, Finance Minister Kevin Doherty said in a statement.

Until this year, the province remained in the black even as most others ran deficits when their economies slowed. Premier Brad Wall's right-leaning Saskatchewan Party government faces an election in April.

Revenue from non-renewable resources -- which include production of oil and the crop fertilizer potash -- looks to fall C$617 million this year, according to the government.

The province will aim to maintain overall spending increases at 2.3 percent annually, Doherty said.

Saskatchewan expects to spend about C$14.3 billion for the year ending March 31, and collect roughly C$13.9 billion in revenue, a drop of C$158.4 million from the previous estimate.

The government estimates the price of West Texas Intermediate oil to average $44.78 per barrel in 2015/16, down from the $49.50 assumption it made in November, and the budgeted $57.15 per barrel.   Continued...