(Reuters) - The western Canadian province of Manitoba is forecasting a narrower deficit for its 2019-20 budget, as the Progressive Conservative government moves closer to a long-term goal of balancing the books while also cutting the provincial sales tax.
Manitoba projected a C$360 million ($267.50 million) deficit for the 2019-20 fiscal year. The PC government, led by Premier Brian Pallister, has promised to balance the budget by 2024, if he would be re-elected to a second term in office.
The province expects to post a C$470 million deficit for the current 2018-19 fiscal year, which ends on March 31, down from the C$521 million shortfall it budgeted in March last year
The province has run deficits since 2009-10, after a major flood and economic downturn blew a hole in its finances. Its high debt load has led to downgrades of the province’s credit rating.
Pallister’s right-leaning PCs said they would cut the retail sales tax to 7 percent from 8 percent on July 1. The government had committed to cut the tax by the next election, which is scheduled for October 2020 but could be called earlier.
By the end of a potential second term, the sales tax reduction would save an average family of four about C$3,000, said Finance Minister Scott Fielding.
Manitoba’s economy depends on farming, manufacturing and mining. It is expected to grow by 1.6 percent this year, before growth drops below 1 percent in 2020 as major projects contribute less of a boost to investment and planned shutdowns of several mining operations weigh on the provincial economy, think-tank Conference Board of Canada said in a February report.
The government projected revenue of C$17.0 billion, up 1.4 percent from the 2018-19 budget, while the forecast rise in spending is 0.3 percent to C$17.5 billion. The new budget includes an allocation for in-year adjustments.
The province’s net debt was forecast to reach C$26.1 billion in 2019-20, 34.7 percent of gross domestic product, up from C$25.2 billion in 2018-19.
Reporting by Fergal Smith; Editing by Susan Thomas and Phil Berlowitz