Tom Marshall, Minister of Finance and President of Treasury Board, provided the 2012-13 fall financial update for the province in St. John's today. — Photo by James McLeod/The Telegram
The provincial government is deep in the red this year, due to lower than forecast oil prices, and lost Atlantic Accord payments from the federal government.
Finance Minister Tom Marshall delivered his mid-year fiscal update this morning and revealed that the province's deficit this year is projected to be $725.8 million.
In April, the government said it would be running a $258 million deficit, but that was based on an oil forecast of $124 per barrel. Oil has consistently traded lower than that all year.
Marshall said the update is a "story of two economies." Essentially, he said, the province's economy is strong, but problems in the world economy are dragging down oil prices and causing issues.
Not only were oil prices lower, but mineral resource royalties were also down substantially.
Marshall said the government is slowly reducing spending, and they're trying to shrink the size of the civil service.
The government is also reviewing all programs and services to find places to cut.
"Future expenditures have to be in line with our forecasted revenues," Marshall said.
He specifically said that public servants who are now in the midst of collective bargaining should not expect big pay increases.