-- The province of Prince Edward Island (P.E.I.) is projecting a $410 million budget deficit for FY26/27, following a much larger-than-expected shortfall of $450 million now expected for FY25/26, said Bank of Montreal (BMO).
The bank recalled the original budget plan had estimated a $184 million deficit, but somewhat softer revenues and sharply higher spending have dragged the province deeper into the red.
At roughly 3.5% of gross domestic product, the FY26/27 shortfall is on track to be the largest in Canada this year, BMO said.
Deficits persist in future years, narrowing modestly to $338 million by FY28/29.
The deep deficits will put upward pressure on net debt this year, which is pegged at $4.5 billion, or just over 38% of GDP. Persistent deficits will push that ratio to 40% by FY28/29, toward the high end of the provincial spectrum, BMO pointed out.
Long-term borrowing is estimated at $900 million for FY26/27, down very slightly from the prior fiscal year.
This is a much deeper run of deficits for P.E.I., potentially closing the book on a decade of effectively balanced budgets, according to the bank.