• Saskatchewan projects a second-straight $1-billion+ surplus in FY 2023 – 2024.
  • Province forgoes tax cuts, opting to pay down debt and up capital expenditures ($3.7 billion in FY 2023 – 2024) instead.
  • Net debt-to-GDP ratio among the lowest in Canada, expected to fall from 14.1% in FY 2022-2023 to 13.2% in FY 2023-2024.

Fiscal balance remains in (big) surplus

Like other resource-producing economies, booming commodity markets put Saskatchewan in a solid financial position in Budget 2023. After turning a projected $463 million deficit into a $1.1 billion surplus in FY 2022 – 2023, there potentially was room for returning some of the revenue bounty to taxpayers this year. Instead, the government held back on tax cuts and opted to present another projected outsized surplus of $1.0 billion in FY 2023-2024. Lower revenue expectations (-2.9%), tighter expenditures (-2.4%), a capital investment boost ($3.7 billion in FY 2023 – 2024) and paying down the debt ($839 million) were the focal points of this budget.

Saskatchewan’s Consolidated Fiscal Plan
($ billions)ForecastEstimateEstimateEstimateEstimate
Total revenues20.319.719.419.820.3
Total expenditures19.118.719.219.720.2
Net Debt-to-GDP (%)

Resource revenues projected to slide

After major windfalls in the prior two years, provincial non-renewable resource revenue is expected to dip more than one billion (-26%) from FY 2022-2023. While the commodity market outlook remains strong, prices for key products has weakened amid a softening economic environment. Notably, the price of potash (one of Saskatchewan’s primary minerals) is projected to drip down to $815.80 per tonne – representing a 40% ($519) decline from the province’s 2022 estimate. With soft resource revenues baked into the province’s fiscal plan, Saskatchewan seems prepared for the 2023 downturn.

Showing restraint

Saskatchewan historically has tended to keep its spending up even after highly-volatile resource revenue turned down—giving way to deficits. Not this time. The government is showing restraint in the face of expected weaker revenues. Budget 2023 has expenditures shrinking by roughly the same margin as revenues, leaving its $1 billion surplus largely unchanged.

Biggest capital plan ever

The province isn’t letting up on capital investment though. Up $763 million (+26%) from FY 2022 – 2023 projections, the government’s $3.7 billion capital plan is its largest in history (in nominal terms). Major investment includes $1.2 billion to SaskPower, $422 million to improve over 1,000 km of highways, and $348 million to municipal infrastructure.

Saskatchewan is reducing its debt

Despite the larger capital plan, the government plans to slim down its debt for the second consecutive year. It projects net debt to fall nearly $840 million (-6%) in FY 2023-2024, following a $520 million estimated decline (-3.4%) in FY 2022 – 2023. These reductions are the first in nearly a decade in Saskatchewan.

They will help improve an already solid indebtedness position. The province’s net debt-to-GDP ratio is among the lowest in Canada. It is expected to fall from 14.1% in FY 2022-2023 to 13.2% in FY 2023-2024, and stay close to that level over the medium term (reaching 13.9% in FY 2025 – 2026). Budget 2023’s debt profile represents a notable improvement from the 20.4% anticipated for the same year in Budget 2022. Saskatchewan continues to track a sustainable fiscal path forward.

Rachel Battaglia is an economist at RBC. She is a member of the Macro and Regional Analysis Group, providing analysis for the provincial macroeconomic outlook and budget commentaries.

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