PROVINCE OF SASKATCHEWAN - publications.gov.sk.capublications.gov.sk.ca/documents/15/105687-Investor...
Transcript of PROVINCE OF SASKATCHEWAN - publications.gov.sk.capublications.gov.sk.ca/documents/15/105687-Investor...
THE SASKATCHEWAN DIFFERENCE
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• Economic Stability• Diversified economy balances cyclicality of resources
• Growing population
• Majority government with strong mandate
• Fiscal Responsibility• Budget 2018-19: On Track to return to balance in fiscal 2019-20
• No major new tax changes
• Continued targeted infrastructure investments
• Financial Flexibility• Among lowest provincial debt levels in Canada
• Low reliance on federal transfer payments
• Strong credit ratings
DIVERSIFIED
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Agriculture, Forestry, Fishing & Hunting
6%
Mining and Petroleum21%
Manufacturing7%
Construction7%
Transportation, Warehousing & Utilities
7%
Wholesale and Retail Trade11%
Finance, Insurance & Real Estate
14%
Business Services9%
Government Services6%
Education & Healthcare11%
2016 REAL GDP BY INDUSTRY
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ECONOMIC OVERVIEW
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4.0
7.28.0
12.6
8.7
10.9
2.7
0
5
10
15
Per
Ce
nt
Ch
ang
e
Source: Statistics Canada
SASKATCHEWAN KEY ECONOMIC INDICATORS (2017 over 2016)
Retail Sales
Whole-sale
NewCars Exports
BldgPermits
HousingStarts
MfgSales
• Many of the key indicators posted strong growth in 2017
• While some investment indicators were down slightly in 2017, they remain high in an historical context
GROWTH RETURNS IN 2017
Signs in 2017 that the economy is rebounding from recent challenges include:
• Population reached 1,169,752 as of January 1, 2018, an increase of 13,410 from January 1, 2017.
• Manufacturing sales grew by 12.6 per cent and new motor vehicles sales were up by 8.0 per cent in 2017, the fourth-highest percentage increases among provinces.
• Oil production and value of sales were up by 5.4 per cent and 33.9 per cent in 2017, respectively.
• Potash production and value of sales were up by 13.1 per cent and 13.9 per cent in 2017, respectively
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Saskatchewan Economic
2017 2018 2019 2020 2021 2022
Real GDP 1.5 1.3 2.5 2.6 2.2 1.9
Nominal GDP 4.9 4.0 4.3 4.2 4.6 4.5
CPI* 1.7 2.3 1.8 1.8 1.9 1.9
Employment Growth (000 jobs)* (0.9) 2.5 4.6 5.4 5.3 5.1
Unemployment Rate (%)* 6.3 6.1 5.9 5.7 5.5 5.6
Retail Sales* 4.0 2.7 2.5 2.3 2.6 3.0
* 2017 Actual
(Per Cent Change Unless Otherwise Noted)
STRONG EMPLOYMENT AND
POPULATION FUNDAMENTALS
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400
450
500
550
600
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Thousands o
f P
eople
Source: Statistics Canada
1998-2007Average (477.1)
SASKATCHEWAN EMPLOYMENT
2008-2017 Average (550.5)
-10,000
-5,000
0
5,000
10,000
15,000
20,000
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Num
ber
of
People
Source: Statistics Canada
1998-2007Average (-2,319)
SASKATCHEWAN POPULATION GROWTH (January 1)
2008-2017 Average (+16,120)
COMPETITIVE TAX AND
UTILITY RATES
• 2nd lowest personal taxes among provinces
• Competitive business tax environment
2018 INTERCITY COMPARISON OF TAXES AND UTILITIES(FAMILY AT $100,000 TOTAL INCOME)
Source: Ministry of Finance, Budget 2018-19
Total Household Utility Costs comprised of: home heating, electricity, telephone and auto insurance.
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2018-19 BUDGET
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• 2018-19 Budget $365M deficit
• Revenue up 0.6% from 2017-18 Budget / up 2.2% from Q3• Expense down 1.4% from 2017-18 Budget / up 0.5% from Q3
($M)
Revenue 14,165.1 13,943.0 14,243.5
Expense 14,811.1 14,538.0 14,608.8
Adjustments (50.0) - -
Surplus / (Deficit) (696.0) (595.0) (365.3)
2017-18 2017-18 2018-19
Budget Forecast Budget
2018-19 BUDGET HIGHLIGHTS
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The Plan:
• Budget 2017 established a 3-year plan to restore balance by controlling spending and reducing dependence on volatile resource revenue
Budget 2018:
• Controls spending while providing important investments in health care, education and social services
• Supports continued economic growth
• Continues on the course to restore a balanced budget by 2019-20 12
2018-19 REVENUE MEASURES
• Maintaining last year’s efforts to shift reliance from volatile resource revenues to consumption taxes
• No increases to tax rates – PST, income taxes, EPT – and no carbon tax
• New initiatives
– Saskatchewan Value-added Agriculture Incentive
– Saskatchewan Technology Start-up Incentive
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COMMODITY PRODUCTION
1515
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
20
40
60
80
100
120
140
160
180
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
# o
f W
ells
Dri
lled
US
$/B
arr
el
Oil Wells Drilled WTI Oil PriceSource: Ministry of Energy and Resources
WTI OIL PRICE AND OIL WELLS DRILLED
Forecast
10
15
20
25
30
35
40
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Mill
ions o
f T
onnes
Source: Ministry of Agriculture
1998-2007Average (23.8)
SASKATCHEWAN CROP PRODUCTION
2008-2017 Average (31.2)
RESOURCE ASSUMPTIONS
Sensitivities to Budget Assumptions
Change Net Impact
($M)
Oil Price (WTI US$/barrel) $1 16 Exchange Rate (USD/CAD) 1 cent 21 Potash Prices (US$/KCI tonne) $10 35
2018-19 2019-20 2020-21 2021-22
WTI Oil Price (US$/bbl) 58.18 59.75 63.50 69.00
Differential (% of WTI) 22.1 19.8 17.7 16.7
Production (million barrels) 177.7 181.0 183.4 185.5
Potash Price (US$/KCl tonne) 191 194 197 201
Potash Sales (million K2O tonnes) 12.6 13.2 13.6 14.0
Canadian Dollar (US cents) 78.34 79.65 81.55 82.58
RESOURCE ASSUMPTIONS:
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RETURN TO BALANCE
Revenue 14,244 14,761 15,114 15,518
Expense 14,609 14,755 15,006 15,306
Surplus (Deficit)* (365) 6 108 212
Revenue growth 1.6% 3.6% 2.4% 2.7%
Expense growth -1.4% 1.0% 1.7% 2.0%
MEDIUM-TERM FINANCIAL OUTLOOK
2018-19 2019-20 2020-21 2021-22
($M)
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TARGETED INFRASTRUCTURE
INVESTMENTS
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Saskatchewan Builds Capital Plan 1.2
Crown Corporation infrastructure investments 1.5
Total Infrastructure Investment 2.7
2018-19 Infrastructure Investments ($B)SaskPower = $883M
SaskTel = $298M
SaskEnergy = $268M
SaskWater = $34M
551
1,361
927
1,174
612
780 823
954
1,154
1,757
1,582
1,241
854
746 772
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18F 2018-19 2019-20 2020-21 2021-22
SASKATCHEWAN BUILDS CAPITAL PLAN($ Millions)
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MANAGEABLE DEBT LEVEL
• $2.28B increase in total public debt from 2017-18
– Up $1.44B for SK Builds Capital Plan
– Up $400M for GRF operating
– Down $95M for other GSOs
– Up $536M for GBEs
• Second lowest Net Debt to GDP ratio among provinces
($M)
GRF
- Operating 5,750.0 5,750.0 6,150.0
- SK Builds Capital Plan 2,755.6 2,751.7 4,193.8
Other GSO Debt 556.9 526.1 431.3
GSO Debt 9,062.5 9,027.8 10,775.1
GBE Debt 9,137.5 8,724.0 9,259.8
Public Debt 18,200.0 17,751.8 20,034.9
2017-18 2017-18
ForecastBudget
(As at March 31)
Budget
2018-19
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CONSERVATIVE DEBT MANAGEMENT
• Domestic issuance focused, no FX exposure
• Focused on longer term issuance
• 17+ years average term to maturity of term debt
• Sinking Fund – currently $2.0B
• Significant short-term borrowing capacity
• Promissory Note authority up to $4.0B
• Accessed $232M prom note financing in F2017-18
• Modest near-term debenture maturities
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STRONG CREDIT RATINGS
RATING AGENCYCURRENT RATING
LONG-TERM
CURRENT RATING
SHORT-TERM
MOODY’S Aaa Not Rated
STANDARD & POOR’S AA A-1+
FITCH AA F1+
DBRS AA R-1 (high)
April 201824
Province of Saskatchewan
CONTACT INFORMATION:Rod Balkwill Denise MaczaExecutive Director Associate Deputy Minister1 (306) 787-9473 1 (306) [email protected] [email protected]