Slight Shift in Deficit for Second Quarter

Nova Scotia Finance Minister Neil LeBlanc today updated information on the province's finances and the economy.

A substantial decrease in federal revenues is prompting the department to revise its deficit projection slightly upwards in its latest year-end forecast.

The 2001-02 deficit is now projected to be $98.3 million, a $750,000 increase over the Sept. 7 forecast and a $7.6 million increase over the March budget.

While provincial revenues rose by $41.2 million, federal revenues fell by $66.5 million, for a total revenue decrease of $25.3 million. Higher provincial revenues resulted from personal income taxes and tobacco taxes.

Reduced program expenses and lower debt-servicing costs are helping to offset the federal revenue decline.

"Against incredible odds, the deficit inched up only $750,000 from the last update," said Mr. LeBlanc. "With the downturn in the economy, we were smart to reduce spending in anticipation of revenue reductions from the federal government. We now believe that $98.3 million appears to be a reasonable projection for the year-end deficit."

The minister also provided an economic outlook for the province. The department now predicts an economic growth rate of 1.5 per cent, down from the budget forecast of 2.3 per cent. Nova Scotia is expected to weather the economic slowdown better than most provinces, thanks to the continued activity offshore. Overall, employment has held steady throughout the first 10 months of this year through gains related to the energy sector. Additional jobs have been created from new call centers and manufacturing expansions.

The economy is expected to show moderate growth in the second half of 2002, with a strong recovery in 2003.