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WINNIPEG — A credit-rating agency is predicting a higher deficit in Manitoba next year, but Finance Minister Adrien Sala says the province remains committed to its campaign promise to balance the budget before the next election, slated for October 2027.
While the government has predicted a $327-million deficit for the 2026-27 fiscal year, Moody’s is forecasting a deficit of $900 million, driven in large part by trade uncertainty and tariffs imposed by the United States and China.
“This scenario is moderately weaker than the province’s budget projection given our view of a longer-lasting period of trade uncertainty that will weaken revenues,” Moody’s officials wrote in a recent credit opinion report.
Moody’s is also forecasting a deficit in the current year of $1.9 billion — higher than the government’s initial pre-tariff budget prediction in the spring but matching a second set of budget numbers based on the potential impact of tariffs. The canola and pea industries are among those that have been slapped with tariffs since the spring.
The agency has maintained the province’s credit rating and says the outlook is stable, partly due to Manitoba’s diversified economy and international export markets. But it says the province is facing trade disruption, structural deficits and spending growth.
Manitoba has run deficits in all but two years since 2009, and Moody’s says the province has a higher debt load relative to other jurisdictions.
Sala said the government has not yet prepared its budget for next year, but the economic impact from tariffs so far has not been as bad as some had feared. Projections of economic growth, measured as gross domestic product or GDP, can change, he added.
“Look, these GDP projection numbers can fluctuate up and down. I’ve certainly seen that in my short time as finance minister,” Sala said in an interview Thursday.
“We’re going to start prepping our next budget and we’ll see how those numbers change as we move ahead. But as things stand, we are absolutely committed to delivering on that balanced-budget commitment.”
The province’s road map to a balanced budget has already faced some hurdles. Last December, the government announced its deficit was heading to be $500 million higher than projected, due largely to rising spending in health care. Final numbers of the last fiscal year are expected later this month.
On the revenue side, the NDP has made two tax changes that have increased government income since winning the last election. The government has revamped a rebate system on education property taxes and has stopped automatically raising personal income tax brackets in line with inflation.
The Moody’s report said the province has room to increase taxes and remain in line with other governments, if need be.
“Manitoba’s level of taxation, including its sales taxes, is competitive among Canadian provinces, presenting the province the flexibility to raise taxes if revenues were to fall below expected levels while still remaining competitive with other jurisdictions.
This report by The Canadian Press was first published Sept. 11, 2025.
Steve Lambert, The Canadian Press
