The citizens of Newfoundland and Labrador will soon find out if their provincial government will remain in the black or plunge into the red when the 2021 budget is released today.
The province’s financial situation has been precarious in recent years, with its credit rating downgraded by Moody’s Investors Service in January 2020 and a projected deficit of $1.8 billion for the 2020-21 fiscal year. To stay afloat, the government has had to rely on a combination of federal aid and borrowing, but it remains to be seen if these measures will be enough to keep the province in the black.
The 2021 budget is expected to provide details on how the province plans to address its fiscal challenges. The budget is expected to focus on reducing the deficit, which will likely involve spending cuts, tax increases, and additional borrowing. It’s also possible that the government will look to investments in infrastructure and other areas to stimulate the economy and create jobs.
Given the precariousness of the province’s finances, it will be essential for the government to find a balance between cutting spending and stimulating the economy to ensure a return to a balanced budget. To do this, the government will likely need to make difficult decisions, including deciding which services or programs to cut or reduce and how much to raise taxes or borrow.
Whatever the budget contains, it is clear that the province’s financial future will depend on the government’s ability to make difficult choices and implement the right mix of spending cuts, tax increases, and investments. The 2021 budget will be an important first step in determining if Newfoundland and Labrador can remain in the black.