November 27, 2013 / 4:33 PM / in 4 years

Saskatchewan sees smaller surplus as potash prices sag

Nov 27 (Reuters) - The resource-rich Canadian province of Saskatchewan said on Wednesday it sees a smaller-than-expected budget surplus in the current fiscal year, hit by disappointing potash revenues.

Saskatchewan, which accounts for more than 40 percent of the world’s known reserves of the crop nutrient, forecast a 2013/14 surplus of C$22.8 million ($21.5 million), down from its August estimate of C$33 million and the budgeted figure of C$64.8 million.

In a mid-year fiscal update, Saskatchewan Finance Minister Ken Krawetz said he expects revenue of C$11.57 billion, down C$33.9 million from its budget estimate.

Revenues from potash production and the provincial sales tax are expected to fall short of budget estimates, partly offset by higher revenues from crude oil and corporate income tax.

Global potash prices have sagged since the July breakup of Belarusian Potash Company, which led to greater emphasis on sales volume over price by the world’s biggest producer, Russia’s Uralkali OAO. Saskatchewan is home to potash mines operated by Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc.

The government expects potash prices to average $348 per tonne in 2013/14, down from its budget estimate of $395.

Saskatchewan expects its debt, not including that of government-owned corporations, to remain C$3.8 billion.

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