April 12, 2022 | 17:48
Manitoba Budget FY22/23 — On Solid Ground
The Province of Manitoba is projecting a $548 million summary budget deficit in FY22/23, improved from the $1.4 billion now expected for FY21/22. That weighs in at a modest 0.6% of GDP, which is pretty well par for the course for the provinces this year. The deficit path is somewhat deeper (call it roughly $200 million per year) than previously expected, but that comes with some tax relief.
Looking ahead, the Province expects the deficit to decline slowly through the forecast horizon, still sitting at $260 million by FY25/26. While there is technically no balanced budget in sight, the very shallow deficits allow the debt-to-GDP ratio to keep falling, and therefore won't be of much concern at this point.
There were a few notable measures, with net tax relief amounting to a modest $167 million on a full-year basis ($84 million for FY22/23). These include:
Manitoba's budget is based on a reasonable economic outlook. The government expects real GDP to grow 3.6% this year and 2.8% in 2023, which is not far off our current call (3.3% and 2.6%). Manitoba remains a stable province, with exposure to many industries, but no excessive weight in any one sector. That said a very difficult year in agriculture weighed last year, and many are hoping for better conditions in 2022.
Total revenue is expected to rise 3.5% in FY22/23, led by gains in income tax receipts and federal transfers. The latter are supported by higher equalization and Canada Health Transfer payments. Meantime, total spending will rise a moderate 2.5%, with small increases spread across a wide range of departments. Manitoba also builds in a contingency for continued COVID recovery funding worth $630 million this fiscal year, leaving some room to maneuver on the spending side, while still hitting the deficit target.
Total borrowing requirements are pegged at $4.7 billion in FY22/23, after factoring in $1.5 billion in completed pre-funding, but also a planned $1.6 billion in pre-borrowing for next fiscal year. Refinancing also makes up $2.7 billion of the total. Government business enterprises (mainly Manitoba Hydro) will account for $1.5 billion of the total borrowing, with $1.2 billion in refinancing.
Summary net debt will rise to $30.5 billion this year, from $29.3 billion at the end of FY21/22. That weighs in at 35.9% of GDP, down 0.5 ppts from the prior year. This is also a marked improvement from a year ago, when the Budget 2021 ratio was initially pegged at 39.9%. Notably, that is also holding comfortably below Ontario (budget pending) and Quebec.
The Bottom Line: This was a very steady budget that doesn't make any major waves with new policy, or with the fiscal outlook, and that's not a bad thing. Manitoba is in a solid spot on the Canadian fiscal landscape.