Prince Edward Island predicts a $98.6 million deficit in 2023-2024

The Prince Edward Island government released a fiscal and economic update Wednesday, projecting a larger deficit than expected in the 2023 operating budget.

The deficit is predicted to be $98.6 million, which is an increase of $1 million since the release of the budget in May.

The report, which is prepared by the Department of Finance, states provincial revenues have grown by $25.7 million, primarily due to increases in tax revenues and federal transfers.

However, expenditures are forecasted to increase by more than $26 million, which is largely being attributed to an anticipated uptake for energy efficiency programs and costs associated with an increase in caseloads for social programs.

ECONOMIC GROWTH

According to a news release from the province, P.E.I. leads the country in growth in several key economic areas, such as:

• employment
• retail sales
• manufacturing shipments
• international exports

“Continued strong population growth, a late-in-the-year rebound in construction activity, combined with the solid performance in the rest of the economy, is fueling economic growth in 2023,” reads the release.

SIGNS OF ECONOMIC RECOVERY

Finance Minister Jill Burridge says the economic update is welcome news, as it “shows signs of economic recovery.”

“Between targeted supports government introduced to assist with affordability, and more Islanders supporting local, we continue to see positive impacts for our province as a whole,” said Burridge in the release.

The province saw a boost in tourism, according to the report, with increases in bridge and air traffic and motorcoach tours, as well as a record-breaking cruise ship season. However, there was a decrease in ferry traffic, after a series of mechanical failures on the MV Confederation caused a weeks-long disruption in service.

The report highlights significant challenges to economic growth, but states certain advantages should allow the economy to continue to expand, such as:

• population growth
• labour demand
• wage increases
• inflation moderation
• carbon pricing rebates
• economic diversification

For more Prince Edward Island news visit our dedicated provincial page.