Newfoundland and Labrador budget projects $688-million deficit

Newfoundland and Labrador Finance Minister Craig Pardy delivers the provincial budget in the House of Assembly in St. John's, N.L., on Wednesday, April 29, 2026. THE CANADIAN PRESS/Paul Daly

ST. JOHN’S — Newfoundland and Labrador’s new budget is projecting a $688.5-million deficit for the 2026-27 fiscal year with no end in sight to annual shortfalls.

The province’s Progressive Conservative government tabled its first budget Wednesday since unseating the Liberals in a provincial election last fall. The $11.5-billion spending plan, titled “Opportunity for All of Us,” includes tax breaks, a boost in health-care spending and money for the oil industry.

It also sets aside funds to pay off a $750-million line of credit amassed by the provincial health authority.

• Latest updates on investing here

Absent is a plan to balance the budget. While other Atlantic provinces have announced cuts to offset large deficits, Newfoundland and Labrador’s five-year forecast includes several years of escalating deficits of more than $1 billion.

“We’ve got to plan to get (the deficit) down,” Finance Minister Craig Pardy told reporters. “But we have to do it with the balance that we would address health care and the cost of living.”

He promised to make a plan this year to chip away at the deficit.

The government will end the 2026-27 fiscal year with a net debt of $20.8 billion, in a province of about 530,000 people.

Interest and other debt fees will cost an estimated $1.2 billion, accounting for roughly 10 per cent of the government’s total expenses. That’s more than the province will spend on social supports and justice and public safety, combined.

The Tories’ outlook for the next five years includes income related to a still-developing green hydrogen sector and Equinor’s proposed Bay du Nord offshore oil development.

It does not include revenue from a draft energy deal with Hydro-Québec, which is set to expire on Thursday. The Liberals unveiled the deal in 2024, and they had factored it into their financial predictions when they were in power.

The budget forecasts three consecutive years of deficits above $1 billion beginning in the 2027-28 fiscal year, which officials say will be driven largely by discounting the energy deal and increasing health-care spending.

Liberal Leader John Hogan noted that the energy agreement was retroactive to 2025 and there would already be money coming in if the Tories had continued negotiations with Quebec toward final agreements. Instead, the Tories have put the deal on hold.

“We would be getting the check for about $1.4 billion from Quebec,” Hogan told reporters. “Not only would we get rid of the deficit that exists today, we would have a massive surplus.”

Health Minister Lela Evans got upset Wednesday as she blamed the health authority’s staggering line of credit on “chronic underfunding” by the previous Liberal government.

“We really have to understand what we’ve been left with,” she told reporters.

Her department is earmarking $6.5 million for a team of 25 Newfoundland and Labrador nurses who could replace so-called “travel nurses” from private agencies. Evans said the health authority spent $86 million on travel nurses in the last fiscal year and there is $38 million allotted this year.

The province will spend $5.4 billion on health care in 2026-27, an increase of $120 million from the year before.

Pardy seemed pleased Wednesday that his budget included several of the campaign promises his party made, which totalled nearly $285 million before last year’s election. The most expensive was a pledge to hike the basic personal amount exempt from income tax to $15,000. That will cost the province $45 million in the current fiscal year and about $91 million the next year, officials said.

• Latest economic news on BNNBloomberg.ca

Soaring oil prices spurred on by conflict in the Middle East helped the Tories make good on their promises, Pardy said.

“Any time you’ve got oil going up, that helps out the provincial coffers,” he said.

A one-dollar change in oil prices translates to a gain or loss of about $33 million for the province, officials said. Wednesday’s budget relies on a forecasted oil price of US$79 per barrel.

Newfoundland and Labrador is home to four offshore oil installations, all operating off the coast of St. John’s. Equinor’s Bay du Nord project would be the fifth and the first deepwater oil development in Canada. The company has not yet decided to proceed with the project.

Pardy’s budget provides $90 million over the next three years to encourage more oil exploration.

“The potential in our resource-based sectors is booming,” Pardy said. “We’ve got a lot to look forward to.”

---

Sarah Smellie, The Canadian Press

This report by The Canadian Press was first published April 29, 2026.