Newfoundland and Labrador's Deficit More Than Doubles on Lower Revenue, Higher Spending, Says Scotiabank

11:25 AM EST, 12/17/2025 (MT Newswires) -- Newfoundland and Labrador's budget deficit for fiscal year 2025-26 has been revised to $948 million, or 2.2% of nominal gross domestic product, which is larger than the $372 million deficit, or 0.9%of GDP, planned in Budget 2025 in the first fiscal update by the new Progressive Conservative government, said Scotiabank.

The lower revenue forecast is driven by removing about $350 million in revenues related to the tobacco settlement, as well as a reduction in oil revenue of about $190 million due to lower oil prices, which have been partially offset by increases in taxation revenue, noted the bank.

Provincial spending is now projected to be $11.3 billion in FY26, up 5.7% compared with FY25 as a result of higher health care costs.

Net debt for FY26 has been revised up to $19.9 billion, or 45.6% of nominal GDP, from $19.4 billion, or 44.7% of nominal GDP, expected in Budget 2025.

The new government of the province has indicated that its priorities are enhancing healthcare, lowering taxes and safer communities.

Adding back the remaining tobacco settlement funds into the fiscal framework will help to reduce the deficit, but the government will also have to contend with downside fiscal risks, including lower oil prices, ongoing trade uncertainty, and possible delays to the Churchill Falls expansion project, pointed out the bank.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.