(MENAFN- Baystreet.ca) Canada's smallest province is forecasting a big budget deficit.
Prince Edward Island, Canada's smallest province both geographically and in terms of population, is projecting a budget deficit for fiscal 2020-21 of $173 million, up substantially from a deficit of just $3.7 million in the previous fiscal year, which ended on March 31.
Gross Domestic Product (GDP) is expected to shrink by 1.1% to $7.1 billion and net debt is projected to increase by $286 million -- representing a jump of more than 230% compared with the previous fiscal year.
PEI Finance Minister Darlene Compton said the COVID-19 pandemic "has impacted us in all respects -- emotionally, socially and economically… No foresight could ever fully prepare us for the COVID-19 pandemic and its aftermath."
PEI.'s government has spent $200 million on direct and indirect support to individuals, families and businesses during the pandemic, including more than $100 million in loans and working capital to keep companies afloat during the crisis.
Finance Minister Compton is projecting revenues in fiscal 2020-21 of nearly $2.3 billion and plans to increase overall spending by more than 14% to stimulate the economy and support people. The new budget calls for almost $2.5 billion in total spending, including millions in additional funding for health-care, education and housing.
The island, which has a population of 156,947 people and is dependent on tourism during the summer months, finished the last fiscal year with a deficit of $3.7 million, and had projected the year would finish with a balanced budget.
Despite the coronavirus pandemic, Compton's budget suggests the island's finances will begin improving in fiscal 2021-22. GDP is forecast to increase by more than 8%, with the budget deficit lowered to $70 million.
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