N.L. tables stay-the-course budget with projected $372M deficit and record spending

Newfoundland and Labrador recently unveiled its 2025-26 provincial budget in response to uncertainty from the United States. The budget includes record spending and delays the province’s return to a balanced budget by another year.

Finance Minister Siobhan Coady explained that the province anticipates a $372-million deficit for the upcoming year to address affordability issues and tariff concerns. This figure could increase further if the province taps into an additional $200 million in contingency funds set aside to address challenges related to the United States, particularly under the Trump administration.

Coady emphasized that the government could have pushed for a balanced budget but chose to prioritize affordability instead. She stated, “It was not the year for us to force going back to balance this year. Every year, it is a balance of where we are with the economy.”

The budget maintains a no-new-taxes approach for the fourth consecutive year and continues previous affordability measures, such as a reduction in the gas tax. However, there are not many new measures introduced in the budget, which comes just months before voters head to the polls.

One notable change in the budget is a moderate increase in the seniors benefit, linked to the cost of inflation. This adjustment will result in an average increase of $46 for approximately 50,000 seniors aged 65 or older.

Projected revenues for 2025-26 are estimated at $10.7 billion, while expenses are set to reach a record $11 billion. The province’s net debt is also reaching a record level, nearing $20 billion.

Despite the challenges, Coady expressed confidence in the provincial economy’s current status, citing achievements in gross domestic product, employment, retail sales, and household income in 2024. However, the budget forecasts a decline in these areas for 2025, with a decrease in employment and an uptick in unemployment expected.

Looking forward, the budget anticipates a resurgence in employment and household income between 2027 and 2029. This uptick is tied to the projected launch of several key projects, including Voisey’s Bay underground, Churchill Falls, Bay Du Nord, and wind hydrogen initiatives.

In her budget speech to the legislature, Coady highlighted the province’s accomplishments, from its pandemic response to significant agreements and initiatives. She emphasized the need to build on this momentum for the future.

Amid ongoing trade tensions between Canada and the United States, Coady emphasized the importance of staying vigilant and strategic. She noted that the province is facing a historic moment and must navigate economic challenges with determination and resilience.

As Newfoundland and Labrador prepare for the road ahead, the government remains committed to steering the province through turbulent waters with a steady hand and a clear vision for the future.