Higher oil prices mean 'encouraging' first quarter for N.L. finances
Finance Minister Ross Wiseman offers cautionary note as oil begins another dip
Finance Minister Ross Wiseman says higher than anticipated oil prices and lower spending resulted in an encouraging first quarter for Newfoundland and Labrador's fiscal circumstance.
The finance department had projected that Brent crude would trade at $55 per barrel for the first three months of the 2015-16 fiscal year, but the actual number was $6 higher, said Wiseman.
He said expenditures also came in lower than projected, with most departments still in "restraint mode" after the government was forced to slam the brakes on spending last year after oil prices plummeted.
Wiseman said he is "encouraged" by the early results, but cautioned it's a picture that will not truly begin to develop until this fall when the province typically gives a mid-year fiscal update.
"The first quarter is not always a good measure," he stated, explaining that spending is not always spread out evenly throughout the year, and revenue streams that depend largely on the oil industry remain volatile.
Indeed, Wiseman said the price of oil through the first month of the second quarter is now trading below projections.
"We thought it would average around $60 a barrel (in the second quarter), but so far it's averaged around $58," said Wiseman.
The finance minister said it will be at least two more weeks before he can release the actual numbers from the first quarter, but the early signs are a welcome change in tone from the austere measures included in the 2015 budget.
The province finished the last fiscal year with a $920-million-plus deficit, and is projecting an even larger hole — $1.1 billion — for this year.
The province is not expected to return to surplus until 2021.