For additional information relating to this article, please contact:
April 25, 2012NEWFOUNDLAND AND LABRADOR BUDGET 2012-13 Newfoundland and Labrador completes the 2012-13 Provincial Budgets. Newfoundland's fiscal picture has shifted dramatically from a surplus of $776.4 million in 2011-12 to a deficit of $258.4 million estimated for 2012-13.
This fiscal reversal reflects two significant changes in the Newfoundland economy, one permanent and one temporary. Starting in 2012-13, Newfoundland is no longer entitled to offset payments under the Atlantic Accord and federal fiscal arrangements. This reduces Newfoundland's revenues by $536 million in 2012-13 and future years. In 2012, two of the province's major oil producing platforms will be shut down for scheduled maintenance. The combined effects of these two events will reduce Newfoundland's revenues by $1.1 billion in 2012-13, a loss that overwhelms any other revenue growth.
With substantial withdrawal of revenues, Newfoundland has limited total expenditure growth to only 2.1 per cent in 2012-13, 2.0 per cent in 2013-14 and 1.0 per cent in 2014-15. Newfoundland and Labrador's fiscal plan anticipates another smaller deficit in 2013-14 before returning to balance in 2014-15. Despite anticipated deficits for the next two fiscal years, Newfoundland's net debt-GDP ratio remains well below levels observed at the end of the 1990s.
Newfoundland's economy has undergone dramatic shifts with oil production over the last ten years. In 2002, Newfoundland posted the fastest real GDP growth experienced by any province in the last 30 years. By 2009, the Province posted the biggest single-year drop in real GDP experienced by any province in the last 30 years. Newfoundland's economic performance and outlook still remains highly exposed to commodity-related investment and production. While oil production shutdowns will slow Newfoundland's economy, capital investment in mining projects and additional oilfield development will keep real GDP growing at a pace of 0.1 per cent in 2012.
2012-13 Newfoundland and Labrador Budget