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February 2, 2021

Economists Outline Causes and Cures for Newfoundland and Labrador’s Fiscal Woes

  • Leading economists Don Drummond and Louis Lévesque turn a spotlight on the root causes of the province’s current fiscal predicament – and prescribe solutions to help safeguard the province’s financial future.
  • The authors track the province’s current fiscal problems back to 2012/13 when the budget balance swung back into deficit and the net debt burden rose. Large budgetary deficits had already opened before the negative impacts of the COVID-19 pandemic compounded the situation. Without strong corrective action, provincial finances appear to be set on an unsustainable track, with net debt to GDP reaching almost 60 percent by 2025 and interest payments eating over 14 percent of revenues.
  • Drummond and Lévesque identify that program spending significantly and chronically in excess of other provinces constitutes by far the largest factor explaining the province’s current fiscal challenges.
Don Drummond

Don Drummond is a Stauffer-Dunning Fellow and Adjunct Professor at the School of Policy Studies at Queen’s University. In 2011-12, he served as Chair for the Commission on the Reform of Ontario’s Public Services. Its final report, released in February 2012, contained nearly four hundred recommendations to provide Ontarians with excellent and affordable public services.

Louis Lévesque

Mr. Lévesque began his career with Quebec’s civil service as an economist in 1983, first with the Crop Insurance Board and then with the Ministry of Finance in the tax policy area. Mr. Lévesque joined Finance Canada in 1991 and rose to the rank of General Director first in the Tax Policy Branch, and later in the Economic and Fiscal Policy Branch.