March 19, 2020 / 10:17 PM / 8 days ago

Canadian province Manitoba budgets smaller deficit, warns of COVID-19 impact

WINNIPEG, Manitoba, March 19 (Reuters) - The western Canadian province of Manitoba is forecasting for now a smaller deficit for its 2020-21 budget, but warned that economic damage from the spread of the coronavirus could expand it considerably.

Manitoba projected a C$220 million ($151.7 million) deficit for the 2020-21 fiscal year on Thursday, down from C$325 million in the current year ending March 31. The spread of COVID-19, the respiratory disease caused by the coronavirus, could drive up health costs, however, and cut government revenues for a combined hit of as much as C$682 million to its bottom line.

Manitoba’s economy depends on farming, manufacturing and mining.

The Progressive Conservative government, led by Premier Brian Pallister, said it would top up its so-called rainy-day fund to C$800 million this month from C$571 million, giving it a buffer to deal with COVID-19.

Unveiling of the C$15.1 billion ($10.4 billion) budget was postponed from last week by procedural delays in the Manitoba legislature by the opposition New Democrats.

The province has run deficits since 2009-10, after a major flood and economic downturn blew a hole in its finances.

The government is on track to balanc the budget within its current term, said Finance Minister Scott Fielding.

The government will lower its sales tax by 1 point to 6% as of July 1. ($1 = 1.4499 Canadian dollars) ($1 = 1.4497 Canadian dollars) (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Peter Cooney)

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