Newfoundland and Labrador deficit soars to $2.1 billion for fiscal 2020-21

Newfoundland and Labrador Finance Minister Tom Osborne speaks with reporters before a meeting with federal, provincial and territorial finance ministers in Ottawa on Tuesday, June 26, 2018. (THE CANADIAN PRESS/ Patrick Doyle)

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ST. JOHN'S, N.L -- Newfoundland and Labrador is projecting a $2.1-billion deficit for fiscal 2020-21 -- an increase of $1.35 billion from last year's budget.

The grim figure was presented in a fiscal update delivered today by Finance Minister Tom Osborne, ahead of a budget expected in September.

Osborne says the soaring deficit is the result of a significant drop in world oil prices and costs associated with the COVID-19 pandemic.

The finance minister says expenses for the fiscal year will jump by $720 million, including an increase of $261 million in health care, $90 million of which is related to the pandemic.

A $200-million contingency fund that was approved in March has also contributed to rising expenses, with $118 million spent so far.

Offshore oil revenue is projected to decrease by $631 million, mainly due to a $560-million drop in royalties.

This report by The Canadian Press was first published July 24, 2020.