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Not to over-emphasize the fact, but our Finance Minister, in his recent Financial Update, projected a deficit of $299.2 million for the fiscal year 2020-2021 compared to a budgeted surplus of $92.4 million.
This is, in my opinion, severely understated. Here’s my reasoning.
For the fiscal year 2018-2019, NB had revenues of $9,697.1 billion with a GDP of 37.5%. (Figures from last audited statement)
Deducting the federal transfers which total 33% of revenues, leaves $6,497.1 in revenues.
For every 1% of GDP, revenues total $173.3 million.
Our Finance Minister projects that real GDP growth for 2020 will be negative at 4.3%. Our private sector forecasters project a 5.5% contraction of GDP.
Using the Minister’s own figures, NB’s revenues will decrease as follows:
-4.3% @ $173.3 million…$745.2 million
-5.5% @ $173.3 million…$ 953.2 million
This is far from $299.2 million.
I believe this to be very serious. If I am right, how will this additional revenue be made up? Borrowing, of course, which we can ill afford. Unless the BoC steps in. And furthermore, I believe that our GDP contraction will be far greater than 5.5%. Fasten your seat belt!!
And this revenue loss does not account for the additional expenses resulting from the coronavirus which the Minister has projected at $100 million. Again, severely understated. WOW!
My thoughts for the day!
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