British Columbia’s Second Quarterly Report continues to forecast a surplus in the current fiscal year, another sign that prudent fiscal planning has helped offset the effects of a volatile economic landscape, Finance Minister Michael de Jong announced today.
The year-end surplus for 2015-16 is now projected to be $265 million, down $12 million from the first quarter forecast. Forecast revenues have improved by $4 million compared to the first quarter, primarily due to stronger income tax revenues, partially offset by reductions in natural resource revenues, commercial Crown corporation net income and other revenue sources.
Government expense is forecast to be $16 million higher than in the first quarter forecast, mainly due to higher refundable tax credit transfers, partially offset by a lower forecast cost of fighting forest fires.
Continued fiscal discipline is reflected in further improvements in the province’s debt affordability. Taxpayer-supported debt for 2015-16 is projected to be $204 million lower than the first quarter forecast, and the direct operating debt – money borrowed to fund programs and services – is forecast to be $176 million lower than forecast at the first quarter update. As a result, the taxpayer-supported debt to GDP and taxpayer-supported debt to revenue ratios are now forecast to be lower than the first quarter report projections.
B.C.’s real GDP is forecast to grow by 2.0% in 2015 and 2.4% in 2016, unchanged from the First Quarterly Report, and remains prudent compared to the private-sector average. B.C.’s economy has experienced steady growth so far in 2015 in some of its key sectors, including retail sales and housing. However, exports growth has been modest. de Jong will be meeting with the independent Economic Forecast Council on Friday, Nov. 27, to discuss the council’s forecast in advance of the upcoming provincial budget.
Finance Minister Michael de Jong:
“We are still on solid footing because we made a prudent plan, and we’re sticking to that plan. We’re cautious because of the volatility we’re seeing in domestic and global economies, but overall B.C. is showing steady economic growth that continues to provide opportunities for British Columbians.”
- Revenues are forecast to improve by $4 million compared to the first Quarterly Report.
- Expenses are forecast to be higher by $16 million compared to the first Quarterly Report.
- Retail sales advanced 7.2% year-to-date to August 2015, with notable gains at food and beverage stores, motor vehicle and parts dealers, as well as building material and garden equipment and supplies stores.
- Year-to-date housing starts to October averaged about 31,400 annualized units, an increase of 12.6% over the same period in 2014.
- The value of B.C.’s merchandise exports was up 0.6% year-to-date to September 2015, over the same period last year. Lower prices for metals, minerals and energy products, alongside weak global demand, are weighing on exports growth.
British Columbia’s 2015-16 Second Quarterly Report is available online: https://news.gov.bc.ca/files/2015-16_SecondQuarterly.pdf
A copy of the powerpoint presentation can be found here: https://news.gov.bc.ca/files/Q2_2015-16_PPT.pdf