The Canadian province of Saskatchewan is seeing its budget deficit shrink due to rising potash and oil prices

Band Ismail Shakil

March 23 (Reuters)The Canadian province of Saskatchewan on Wednesday forecast a deficit of C$463 million ($369 million) in fiscal year 2022-23, less than a fifth of last year’s C$2.6 billion deficit, as higher oil and potash generate more revenue.

The province, home to the world’s largest potash industry, accounting for about a third of annual global output, said this expects revenue to grow 18.5% to C$17.2 billion in the fiscal year beginning in April. Spending is expected to rise 3.1% to C$17.6 billion.

Potash revenues are budgeted at C$1.5 billion in 2022-23, up of the 2021-22 forecast of C$419.8 million, reflecting a higher average price forecast.

Potash prices are near their highest level in 10 years, and recent sanctions imposed on Russia and Belarus, the second and third largest suppliers of potash, are fueling fears of food shortages around the world. The price of potash is expected to rise 48% in 2022, contributing to Saskatchewan’s strong economic outlook, the provincial government said in the budget.

The Saskatchewan Party government, led by Premier Scott Moe, expects the removal of pandemic restrictions and strong potash, oil and gas and export prices to drive the recovery economic. Saskatchewan expects deficits to continue to decline and has said it is on track for a balanced budget in fiscal year 2026-27.

The budget assumes an average North American oil futures price CLc1 of $75.75 per barrel in its fiscal year, generating C$867.5 million in royalties.

($1 = 1.2558 Canadian dollars)

(Reporting by Ismail Shakil in Bengaluru; Editing by Mark Porter)

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