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Newfoundland and Labrador: Budget 2025 - New Spending Pushes Black Ink to Next Year

April 9, 2025
Laura Gu, Senior Economist • Kari Norman, Economist

Newfoundland and Labrador’s (NL’s) fiscal year 2025–26 (FY2026) budget projects a deeper deficit in FY2026, then a return to surplus next year—one year later than previously planned. Surpluses are projected to eventually increase substantially thereafter, driven by strong economic momentum due to capital investment surges, coupled with continued spending restraint.

Revenue projections have been raised due to strong outlooks for oil, gas and mining production. Although Brent price forecasts were revised down, they remain optimistic given the substantial downside risks from trade tensions.

Spending projections were lifted, but the province continues its practice of reducing total expenditures in the outer years beyond FY2026.

Policy announcements address a wide range of priorities, including health, education and affordability challenges. The plan includes a $200M contingency fund for added flexibility to address the economic impacts of US tariffs and counter tariffs.

NL plans for a swift turnaround to exit deficit territory, supported by an optimistic revenue outlook and aggressive spending restraint measures. While the path to fiscal balance is challenging, the province’s public finances appear to have stabilized over the years. Meanwhile, the government is making commendable efforts to transform the province’s finances by continuing contributions to the Future Fund and attracting major investments in wind-hydrogen projects and Upper Churchill-related construction activities, while advancing the development of the Bay du Nord project.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.