Projected N.L. 2016 deficit $1.58B, down from $1.83B

The provincial government has reduced its 2016 deficit projection from $1.83 billion to $1.58 billion.

Finance Minister Cathy Bennett didn't announce any spending cuts in Thursday's fiscal update, but said Premier Dwight Ball will be will be releasing a "vision document" with new spending reductions in the coming weeks.

• N.L. budget: $1.83B deficit, across-the-board tax hikes and layoffs

Bennett said a $217-million increase in revenue and a $111-million drop in expected program spending have helped bring the deficit down to $1.58 billion.

"The seriousness of the fiscal situation remains and needs to be addressed," said Bennett, adding government is still projecting a surplus for 2022-23.

Bennett said the government has reviewed the provincial gas tax and won't be reducing it now, but will review it again for the 2017 budget. The deficit reduction levy timetable likewise remains in place until 2019.

The province's borrowing requirements have been reduced by $500 million, from $3.4 billion to $2.9 billion. However, debt servicing is up by $131 million.

Revenue up $217 million

Total revenue has improved by $217 million since the spring budget was delivered, including an increase in anticipated oil royalties. Bennett noted the province's population is about 3,000 people more than projected at budget time. Several other economic indicators have been reduced:

• Provincial GDP is now forecast to grow 0.6 per cent, down from one per cent in the budget
• Household income is now expected to grow by 0.5 per cent, down from one per cent
• The consumer price index has increased more than expected, from 2.2 per cent at budget time to 2.5 per cent today
• Unemployment, at 13.2 per cent, is also slightly higher than the budget's 12.8 per cent projection

Government had forecasted royalties at $500 million, but that number is now up to $600 million, due to slightly higher than anticipated oil prices and an increase in production, Bennett said.

Oil is now projected at $45 a barrel for the rest of the fiscal year, up from $40 on budget day. Total projected oil production is up by four million barrels, to 70 million barrels.

Cost of new Muskrat Falls agreement

Asked what the recent agreement with Aboriginal groups on Muskrat Falls means for the project's costs and timetable, Bennett said Nalcor and government officials are working out what the costs will be.

"Not only do we have a responsibility from a fiscal perspective but equally — and some would argue more importantly — we have a responsibility to operate a project that respects the social licence that you need to be able to operate in our communities."

"We've made a commitment to the Aboriginal communities, and we intend to make sure that we fulfil that commitment."

Thursday's fiscal update was originally intended to be a "mini" or "supplemental" budget for the provincial government, but by September Premier Dwight Ball was no longer using those terms.

Ball wasn't in the province for the latest update. He was in Ontario for a fundraising dinner with Memorial University alumni.