March 21, 2012 / 8:23 PM / 5 years ago

Saskatchewan sees small surplus, higher potash revenue

3 Min Read

(Reuters) - The booming Western Canadian province of Saskatchewan, flush with potash and crude oil revenues, expects a slim budget surplus in the 2012-13 fiscal year, continuing a nearly two-decade string of balanced books, the government said on Wednesday.

The surplus comes as most Canadian provinces grapple with deficits as they recover from slower economic growth. Saskatchewan's oil-rich neighbor, Alberta, for instance, forecasts a C$886 million ($892.20 million) budget deficit for 2012-13.

The right-of-center Saskatchewan Party government of Premier Brad Wall, however, presides over an economy that is booming as development ramps up in the Bakken oil and gas play and as fertilizer companies, including Potash Corp and Mosaic Co, spend billions on expanding potash mines.

The province's population in 2011 had its biggest growth in 58 years, to nearly 1.1 million people, as workers moved in from other provinces.

"People are coming here because they recognize that Saskatchewan is now a place of opportunity," said Finance Minister Ken Krawetz. "Even in a time of global uncertainty, our government's focus will remain squarely on enhancing and preserving Saskatchewan's quality of life through prudent fiscal management."

Saskatchewan forecast a C$95 million surplus in its C$11.2-billion 2012-13 budget. It expects the 2011-12 year, which ends March 31, to finish C$55.8 million in the black.

After accounting for government-owned corporations, the 2012-13 surplus is forecast at C$14.8 million.

Oil, Potash Royalties to Rise

Saskatchewan rakes in significant revenues from royalties on crude oil and potash production, and is banking on more of both in the coming fiscal year.

It forecasts potash revenue at C$705.2 million, an increase of C$254.1 million year over year, with potash sales expected at the same level as last year, but at higher prices. Royalties will also climb as spending on mine construction peaks. Potash companies get deductions against royalties for capital expansion.

Saskatchewan expects its oil revenues to climb to C$1.6 billion, up C$129 million, on forecasts for higher prices and production.

The province is assuming prices of both potash and crude oil will rise this year and in 2013, to US$102 per barrel for oil and US$477 per tonne for potash at the mine gate next year.

Saskatchewan's public debt - which doesn't include the debt of government corporations such as its power utility - is estimated at C$3.8 billion as of March 31, its lowest level in 25 years.

Including government corporations, Saskatchewan's debt looks to rise over the next year to C$9.6 billion, mainly because of capital expansion by power and telecom utilities.

Government spending in 2012-13 is forecast to climb 5 percent from the previous year, partly to pay for health care.

($1=$0.99 Canadian)

Reporting by Rod Nickel in Winnipeg; Editing by Peter Galloway

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