Released on November 29, 2022
At mid-year, Saskatchewan is forecasting a surplus of $1.1 billion for 2022-23, up from the first quarter forecast by $50.1 million, and a $1.6 billion improvement from budget.
"Our province's strong economy and resources that belong to all Saskatchewan people are contributing to the province's bottom line," Deputy Premier and Finance Minister Donna Harpauer said. "Revenue is forecast to be up from budget, largely the result of high potash and oil prices, as well as higher taxation revenue which reflects solid economic growth. Using higher-than-expected revenue to help people and businesses address higher costs due to inflation, while reducing the province's debt, is growth that works for everyone."
Government's Four-Point Affordability Plan has been implemented. Earlier this month, one-time Saskatchewan Affordability Tax Credit (SATC) payments of $500 were mailed to all Saskatchewan residents 18 years of age and older who filed a 2021 tax return by Oct 31, 2022.
In October, gym and fitness memberships and recreational activities for youth remained Provincial Sales Tax (PST) exempt, and small businesses were helped by the one-year extension of the temporary small business tax rate reduction. The forecast surplus is allowing government to reduce borrowing and retire up to $1 billion in operating debt, announced in the first quarter update, resulting in lower interest costs now and over the medium term.
"Saskatchewan's economy is performing well and is expected to lead the provinces in growth in 2022 and 2023. Employment in the first ten months of 2022 increased by 20,400 jobs, and strong commodity prices and related increases in the value of our exports, along with a rebound in agricultural production, as well as investment growth, are factors contributing to higher economic growth forecasts at mid-year compared to budget," Harpauer said.
At mid-year, revenue is forecast to be $19.5 billion, up $336.9 million, just 1.8 per cent, from the first quarter forecast, and up $2.4 billion (13.7 per cent) from budget. This increase is largely due to a $1.4 billion increase in non-renewable resource revenue at mid-year over budget, reflecting higher potash and oil prices.
Taxation revenue is forecast to be up $1.0 billion from budget, with higher Personal and Corporate Income tax revenue and PST revenue reflecting stronger-than-anticipated economic recovery. Other own-source revenue and federal transfers are also up from budget.
Increases in revenue are partially offset by a projected $481.2 million decrease from budget for net income from Government Business Enterprises (GBEs) primarily due to lower investment income and higher natural gas prices.
At mid-year, expense is forecast to be $18.4 billion, up $286.8 million from first quarter, or 1.6 per cent, and up $795.0 million (4.5 per cent) from budget. The increase is largely due to $450 million for the one-time Saskatchewan Affordability Tax Credit payments to Saskatchewan residents, and $204.3 million in expected increases in Saskatchewan Crop Insurance indemnities and AgriStability benefits paid in 2021 and 2022.
Based on an average of private sector forecasts, Saskatchewan's real Gross Domestic Product (GDP) is expected to grow by 5.3 per cent in 2022 and 1.9 per cent in 2023, the highest growth among the provinces in both years.
"Saskatchewan is on track. International goods exports, investment in building construction, growth in wholesale trade and in manufacturing sales are all among the highest across the provinces so far in 2022," Harpauer said.
Public debt is forecast to be $2.1 billion lower than projected at budget. Improved finances and a return to a surplus has eliminated the need for operating borrowing and provides the opportunity to retire up to $1 billion in existing operating debt.
Saskatchewan continues to have one of the lowest net debt to GDP ratios in the country. Net debt as a percentage of GDP is now forecast to be 14.6 per cent compared to 19.0 per cent projected at budget, currently the second lowest net debt to GDP ratio among the provinces.
Saskatchewan has the second-highest credit rating among the provinces overall when three major rating agencies are taken into consideration.
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