From Surplus to Major Deficit – BC Blames COVID, ICBC

Victoria – The Province of BC is facing a $320 million deficit instead of the $200 million surplus forecast just six months ago. This according to the latest financials from the B.C. government.

Despite strong fiscal results in the first three quarters of 2019-20, unforeseen changes in the fourth quarter due to COVID-19, including declines in tax revenues, ICBC losses and early measures to tackle the pandemic, affected the Province’s 2019-20 financial results.

“While the first three quarters of 2019-20 reflected a modest surplus and steady economic growth, COVID-19 led to lower tax revenues and losses at ICBC in the fourth quarter,” said Carole James, Minister of Finance. “Despite the impacts of COVID-19, I am encouraged that B.C. continues to show positive signs, including improving employment numbers, robust capital spending and the best debt affordability in Canada.”

The fiscal year ended with a deficit of $321 million, which is $595 million lower than the surplus projected in Budget 2019, mainly due to:

* costs related to B.C.’s initial COVID-19 response, such as public health measures;

* lower taxation revenue due to COVID-19; and

* a $298-million ICBC investment loss due to market conditions from COVID-19.

“The final quarter of the fiscal year brought many challenges,” James said. “B.C. isn’t alone in facing these challenges, but we are in a strong position to weather them. The investments we made in 2019-20, such as eliminating MSP premiums and investing in child care and housing, will make life more affordable and support people through COVID-19 as the Province develops a strong economic recovery plan.”

Public Accounts 2019-20 noted that $3.4 billion was spent in increased investments in health, community supports, education and social services, and a historic $4.8 billion in capital spending for hospitals, schools and highways.

Public Accounts 2019-20 show B.C. is in good financial standing with affordable debt levels at the end of the fiscal year and continues to lead the country as the only “AAA” accredited province. Provincial gross domestic product (GDP) for 2019 grew by 2.8%, above the national average of 1.7%.

FYI:

To access Public Accounts online, visit:
https://www2.gov.bc.ca/gov/content/governments/finances/public-accounts

The technical PowerPoint presentation is available online:
https://news.gov.bc.ca/files/PPT_Technical_Public_Accounts_2019_20.pdf

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