March 6 (Bloomberg) -- Manitoba forecast a C$357 million ($325 million) deficit for the fiscal year starting April 1 after posting a C$432 million gap in the current year, and plans to return to a surplus in 2016-17.
“We are on track to return to balance in 2016 and this year’s bottom line is projected to come in C$86 million better than budgeted,” Finance Minister Jennifer Howard said in the text of a speech to the legislature in Winnipeg today.
Manitoba faces pressure from the unexpected loss of C$100 million in federal transfers due to Statistics Canada’s lowering of Manitoba’s population estimates, Howard said. The province plans to create a council to give advice on getting the most value in service delivery, as well as find savings by freezing or reducing the budgets of nine departments, capping administrative outlays by school divisions and limiting core government spending growth to 2 percent a year, according to budget documents.
The province’s fiscal strategy is based on 2.2 percent economic growth this year and a 2.4 percent expansion forecast for 2015, according to the budget plan.
Revenue in the fiscal year ending March 31, 2014, will rise 1 percent to C$14.6 billion, as corporate tax revenue is forecast to climb 8 percent to C$530.1 million.
There were no tax increases in the fiscal plan. Howard said the province will use revenues from a one-percentage point increase in the provincial sales tax introduced last year on infrastructure projects, including roads, highways and flood protection. The tax increase is estimated to bring in C$1.5 billion over the next five years, budget documents show.
Canada’s sixth-largest economy plans to borrow C$4.77 billion in capital markets in 2014-15, little changed from C$4.75 billion in the current year. The province’s net debt will rise this year to $18.6 billion, equal to 29.8 percent of gross domestic product, according to budget documents.
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