Newfoundland and Labrador's 2025-26 Budget: Navigating Turbulent Seas

The Province of Newfoundland and Labrador (Newfoundland or the Province; rated "A" with a Stable trend) presented its 2025--26 budget on April 9, 2025. The Province opted to put forth a largely stay-the-course budget amid heightened economic and political uncertainty. With its 2025--6 budget, Newfoundland has chosen to delay its return to balance by a year (to 2026--7), allowing the Province to maintain affordability measures already in place and respond to the ongoing tariff threat while also pursuing a robust capital plan.

-- In the midst of significant political and economic uncertainty, Newfoundland has introduced a stay-the-course budget absent any material tax changes or pre-election handouts.
-- The Province's planned return to balance has been delayed by one year to 2026--7.
-- With offshore royalties accounting for 15% of revenues, commodity price volatility remains a key risk.
-- On the bright side, Newfoundland is expected to lead all provinces in real GDP growth in 2025.

"The Province has indicated that it has broadly incorporated the impacts of tariffs in its economic forecast, and the provincial economy has minimal direct exposure to affected sectors (automotive, steel, and aluminum); however, there are clear downside risks as deteriorating economic growth conditions will influence commodity price volatility and the broader outlook for Newfoundland's resource-based economy," said Travis Shaw, Senior Vice President, Sector Lead, Global Sovereign Ratings.