Nova Scotia's 2025 Budget: Fulfilling Election Promises Comes at a Cost

The Province of Nova Scotia (Nova Scotia or the Province; rated A (high) with a Stable trend) released its 2025 budget on February 18, 2025. The budget upholds key election promises of the recently re-elected Progressive Conservative Party of Nova Scotia, with a focus on tax cuts and healthcare investments.

Key Highlights
-- Election promises result in higher spending and deficits during an uncertain global macroeconomic outlook.
-- Nova Scotia's debt burden will grow as spending ramps up for budget-related investments.
-- Contingencies of $200.0 million each year through 2028-29 help safeguard against potential economic challenges like U.S. tariffs.
-- Despite the higher debt and deficit projections, the Province has ample fiscal flexibility, a relatively strong balance sheet, and a resilient economy, which provide a reasonable buffer against unexpected economic shocks.

"The outlook accounts for some impact from U.S. tariffs, which could weaken exports in the short term, but assumes their duration will be limited, although the extent of the effects remains uncertain," said Apurva Khandeparker, Assistant Vice President, Global Sovereign Ratings. "However, the various Provincial tax cuts and ongoing capital investments, along with robust residential investments, will lend some support to economic activity."