08:51 AM EDT, 04/11/2025 (MT Newswires) -- The Canadian province of Prince Edward Island (PEI) is projecting a record $184 million budget deficit for FY25/26, following a downwardly revised $166 million shortfall in the previous year, noted Bank of Montreal (BMO).

That weighs in at 1.7% of gross domestic product, one of the deepest among its provincial peers in Canada, said the bank. While United States tariffs aren't explicitly factored into the

economic outlook, the province sets aside a $32 million contingency for FY25/26.

Total revenues are expected to jump 7.1% this upcoming

year, largely from higher tax revenues, federal transfers,

and other revenues. The forecasts are underpinned by

strong economic assumptions, with real GDP expected

to rise 2.5% this year and 2.0% in 2026. That's compared

with BMO's current forecast of sub-1% growth for both years in

a trade war scenario.

Meantime, total spending will rise 7.2% in FY25/26, largely due to higher program expenditures.

The deeper deficit will put upward pressure on net debt this year, which is pegged at $3.6 billion, or 32.6% of GDP. Although the PEI's net debt burden is on the low end of the Central/Atlantic Canada spectrum, the ratio is expected to deteriorate in the coming years, nearing 36% by FY27/28, added the bank.

Long-term borrowing is pegged at $800 million for FY25/26, up from $500 million in the prior fiscal year.