APEC’s new member-only publication ATLΛNTIC Fiscal Monitor provides independent insights on Atlantic provincial budgets and the federal budget.
PEI’s budget, released March 12, forecasts a $112 million deficit for 2021/2022. Spending will increase over 4% to fund investments in health, education, early learning and the environment. Revenues are forecast to grow 5% in 2021/2022, due to higher federal transfers and a $65 million rise in tax revenues. The government is reducing the small business tax rate and taxes for those on low incomes.
Net debt will grow by 9% to $2.6 billion this year. The debt will continue to climb due to operating deficits and capital spending, which remains elevated in 2021/2022. The debt-to-GDP ratio is projected to shrink from 35.4% to 33.8% by 2023/2024 as the economy recovers.
The government did not provide a date to return to balance. However, it projects the deficit will shrink as COVID-19 supports end and the economy recovers.