Manitoba says pandemic induced deficit may not be as bad as feared

The Manitoba government says the impact of the COVID-19 pandemic on this year’s budget will be big, but may not be as large as first feared.

In early March, the government forecast a $220-million deficit. Three weeks later, as COVID-19 numbers grew across Canada, the government warned the deficit could reach $5 billion.

Premier Brian Pallister released updated budget numbers Tuesday that show a more likely scenario is a deficit of $2.9 billion based on new economic projections from banks and other institutions.

The improved estimate is also based on Manitoba’s low COVID-19 numbers, which have allowed the government to let most businesses reopen.

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There have been 325 cases in the province since the pandemic began. Seven people have died and 18 cases remained active as of Tuesday.

“Manitobans have been willing to set aside hard-fought-for rights and live differently to protect themselves and protect others,” Pallister said.

0:42 Manitoba deficit down, but health spending up

Still, he said, the deficit could reach $5 billion if COVID-19 numbers rise and businesses are forced once again to close their doors.

The updated budget figures estimate the provincial economy will drop by five per cent this year, resulting in $1.5 billion less in government taxes and other revenues.

The figures also estimate the province will spend $2.1 billion on pandemic-related programs — everything from protective equipment for health-care workers to a $200 tax credit for seniors that was announced last month.

The Opposition New Democrats said Pallister has hurt the economy by not offering enough help to small businesses during the pandemic.

“Our economy is headed for a relapse because we know that there’s still small businesses struggling and there’s still so many people out of work,” NDP Leader Wab Kinew said.

1:26 Coronavirus: Manitoba to enter reopening Phase 3 on June 21