'Little doubt' P.E.I. will run a deficit for the 2020-21 fiscal year

Just over three weeks in and there is already "little doubt" P.E.I. will have a deficit for the 2020-21 fiscal year, said Minister of Finance Darlene Compton.

In a news briefing on Friday afternoon, officials said the province is feeling the ripple effects of the global economy, as well as unplanned spending on COVID-19 financial programs coupled with unexpected reductions in tax revenues.

"We're not alone in facing this reality, as every province across the country and the federal government are in the same position. We will make the needed investments, but we will do so with vigilance in our spending," Compton said.

"There is little doubt that we will experience a deficit for the 2020-2021 fiscal year."

Compton said she believes P.E.I. was fortunate to be in a solid economic position before the pandemic hit, and she is confident the province has the financial endurance needed to manage a deficit.

'Deficit of around $5 million' for 2019-20

With COVID-19 arriving on P.E.I. in the last few weeks of the 2019-20 fiscal year, the province is also expecting a deficit from last year. 

"For the last fiscal year, it was a deficit of around $5 million. We projected a $2 million surplus, and just that last week or so of March changed that," said Compton.

She said it is a challenge to make revenue projections for the current fiscal year in the light of the pandemic, as it depends on when and how P.E.I. eases back restrictions.

People are not out spending money the way they normally are— Darlene Compton, minister of finance

This means many large revenue sources, like personal and corporate income tax as well as sales tax, are up in the air.

"People are not out spending money the way they normally are, and those are some of our big revenues for P.E.I.," said the finance minister.

"Moving forward for the next year, we're working together with all the departments to come back to us and we are daily working on what the budget will look like, so you know, there are a lot of variables in that." 

Reopening local economy

Compton said P.E.I. is in a good position to borrow the needed funds in both the short and long terms, as the province had a good bond rating going into the pandemic.

Minister of Economic Growth, Tourism and Culture Matthew MacKay was also present at Friday's briefing and said he believes P.E.I. will be able to reopen "fairly soon."

"We're hoping to get back to a bit of a local economy, which is one of the very few provinces that is going to be in that situation," he said.

Compton said they'll be tabling the budget in the legislature "hopefully soon."

She also said her department welcomes the auditor general's involvement in reviewing the government's COVID-19 spending.

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