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Province releases fiscal update concerning pandemic impact

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The Manitoba government has released its economic and fiscal update assessing the impact of the COVID-19 pandemic.
The outlook cites an expected deficit for 2020-21 in the range of $2.9 billion, with a downside risk of a deficit of up to $5 billion in the event of a prolonged economic downturn or a COVID comeback, Premier Brian Pallister and Finance Minister Scott Fielding announced last week.
“The COVID-19 pandemic generated unprecedented public health and economic impacts in our province, which continue to be magnified by the global nature of this crisis,” said Pallister.
“Growing our way out of this pandemic financial hole is the only way forward, which is why our government is focused on getting Manitobans back to work and restarting our economy.”
The province is investing $2.1 billion to fight COVID and restart the economy, which is the second-highest proportion of spending of any province as a percentage of GDP.
That spending is targeted as follows:
• protecting Manitobans - $932 million;
• protecting livelihoods - $477 million; and
• restarting the economy - $774 million.
Manitoba Finance is planning for three economic scenarios - a quick economic rebound, a gradual economic rebound and a long, limited recovery.
Under the quick impact scenario, the 2020-21 summary net debt is projected to exceed $29 billion with a net debt-to-GDP ratio at nearly 41 per cent. This is up from 34.2 per cent forecast in Budget 2020. Higher interest costs alone on this new debt amounts to $70 million more per year, which is equal to building three new schools each and every year going forward, Fielding said.
“Thanks to the government’s effective fiscal management and targeted investments in emergency preparedness prior to the pandemic, Manitoba was better prepared to face this crisis,” the minister said.
“However, the impacts of COVID-19 will take several years to address, and should we have a COVID comeback and the global economy fails to grow, we will wind up with higher projected deficit and debt levels.”
Manitoba’s economy is expected to decline by approximately five per cent this year with an expected loss of revenues in the range of $1.5 billion this year and over $1 billion next year.
With additional unanticipated spending underway to combat COVID this year, a rapid restart to the economy will be required or the province’s financial problems will deteriorate further, Fielding noted.
Manitoba’s road to recovery will focus on two strategies - continued investments in public health preparedness and increased investment in jobs and growth, the premier added.
“There is only one way out of the global economic and public health crisis, and that is to keep our COVID curve flat and grow our economy,” said Pallister.
“Beating COVID creates jobs.”
To view the Economic and Fiscal Outlook visit www.manitoba.ca/RestartMB.

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Staff Writer
REPORTER
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