By The Canadian Press
WINNIPEG — Manitoba’s deficit has become much lower than expected, thanks to a recovering economy and higher-than-expected federal transfer payments.
New figures from the province show the deficit for the fiscal year that ended in March was $704 million, less than half of the $1.6 billion originally projected in the budget.
The Ministry of Finance says the economy grew by more than 9% last year as COVID-19 restrictions were lifted. This increased personal and corporate income tax revenues.
Federal transfer payments have increased, including a one-time special transfer of $145 million to address surgical backlogs and other health issues.
On the other hand, last year’s drought resulted in a sharp drop in production of several Manitoba crops. It also turned an expected Manitoba Hydro profit into a loss of $248 million.
Manitoba has been running deficits since 2009, with the exception of a $5 million surplus the year before the pandemic began.
The ruling Progressive Conservatives have promised to balance the budget by 2028, and another set of figures released Thursday suggest they are headed in that direction.
The first-quarter financial update estimates the deficit for the current fiscal year will be $202 million, less than half of the $548 million projected in the April budget.
The Department of Finance says the improvement is partly due to wet weather, which has allowed state-owned Manitoba Hydro to export more electricity. A continued economic recovery and strong federal transfer payments are also factors.
The ongoing red ink is expected to increase Manitoba’s net debt to $29.5 billion.