07:03 AM EDT, 10/11/2024 (MT Newswires) -- While the overall fiscal outlook remains stable among Canadian provinces, emerging cracks call for increased fiscal discipline and prudent planning in the fall updates, said Scotiabank.

British Columbia (B.C.) and Quebec have experienced deteriorations in their fiscal outlooks, adding to their already significant shortfalls, stated the bank.

Easing downside risks to the macroeconomic backdrop is positive, but not material enough to help with the provinces' fiscal outlook, noted Scotiabank.

Oil-producing provinces should continue to fare better, provided that balanced demand and supply pressures sustain crude price stability.

Cost overruns are likely to exert additional pressure on spending, particularly in areas such as staffing and climate-related expenses, according to the bank.

Upcoming elections in B.C., Saskatchewan and New Brunswick introduce significant fiscal uncertainty, added Scotiabank. B.C. faces a highly competitive race with major campaign promises that could alter the province's fiscal trajectory, while New Brunswick's fiscal outlook remains stable despite a tight race.

Saskatchewan's political landscape appears stable, with the Saskatchewan Party likely to stay in power.

The provinces would be well-advised to navigate the renewed uncertainty with caution, pointed out Scotiabank. Lean economic updates that avoid or minimize major new spending initiatives would align with the limited revenue upside and the fiscal space required to address a range of priorities.

Additionally, it's important to consider the fiscal position relative to the economic cycle. Despite softening economic conditions, provincial fiscal policies remain largely stimulative as measures from earlier budgets continue to be implemented. This further underscores the need to hold the line on spending to ensure fiscal sustainability, concluded the bank.