March 20, 2013 / 8:19 PM / 5 years ago

UPDATE 1-Saskatchewan budgets small 2013/14 surplus

* Higher potash, oil revenues forecast

* Government debt of C$3.8 billion seen unchanged

March 20 (Reuters) - The Western Canadian province of Saskatchewan, which depends heavily on resource revenues and a farm economy, will continue its two-decade string of balanced books in 2013-14, the government said on Wednesday.

Saskatchewan, the only Canadian province to balance its books throughout the financial crisis, forecast a C$64.8 million ($66.7 million) surplus in its C$11.5-billion 2013-14 budget. It said it expects the 2012-13 year, which ends March 31, to finish C$8.8 million in the black.

The right-of-center Saskatchewan Party government of Premier Brad Wall presides over an economy that is booming as development ramps up in the Bakken oil and gas play and as fertilizer companies Potash Corporation of Saskatchewan Inc , Mosaic Co and Agrium Inc complete multi-billion-dollar expansions of potash mines.

Saskatchewan had the lowest seasonally adjusted unemployment rate among Canadian provinces in February, at 3.8 percent, and its population hit an all-time high of nearly 1.1 million people in 2012.

Prices of crude oil and the crop nutrient potash softened last year. But Saskatchewan is counting on a rebound in oil prices and higher potash sales to help it register a narrow surplus in the fiscal year ahead, which starts on April 1.

The budget “balances the need to control spending with the need to make important investments in key areas,” said Finance Minister Ken Krawetz.

Spending is budgeted to increase 3 percent from a year ago, with more going to education, health and highways. Revenue is seen rising at about the same rate to C$11.6 billion.

Saskatchewan, home to more than 40 percent of the world’s known potash reserves, is assuming potash prices will average nearly $389 per tonne in 2013 and almost $414 per tonne in 2014.

Based on its assumptions, potash would earn the government C$519.9 million in 2013/14, up C$122.5 million from the previous fiscal year because of higher sales.

The province expects to collect oil revenue of C$1.4 billion in 2013/14, up C$118.5 million from the current year, based on a well-head average price forecast at C$75.29 per barrel, up C$6 per barrel.

Oil production in Saskatchewan hit a new record volume in 2012 of 172.9 million barrels.

The government expects to raise 23 percent of its revenues from non-renewable resources.

The province is setting aside nearly C$513 million in its savings account, called the Growth and Financial Security Fund, for unforeseen events such as spring flooding.

Saskatchewan expects its general government debt to remain unchanged at C$3.8 billion at the end of 2013/14. But government-owned corporations, which run electricity, gas and other services, will borrow more, leaving the total public debt at C$10.4 billion, up 9 percent.

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