07:59 AM EDT, 04/10/2025 (MT Newswires) -- Newfoundland and Labrador's (NL) fiscal year 2025-26 budget projects a deeper deficit in FY2026, then a return to surplus next year -- one year later than previously planned, said Desjardins.

Surpluses are projected to eventually increase substantially after, driven by strong economic momentum due to capital investment surges, coupled with continued spending restraint, noted the bank.

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

Spending projections were lifted, but the province in Canada 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 $200 million contingency fund for added flexibility to address the economic impacts of United States 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, added the bank. 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.