PEI forecasts $440.4M deficit as first-quarter update points to resilient economy

Prince Edward Island is forecasting a deficit of $440.4 million for the 2026-2027 fiscal year, $30.5 million more than the operating budget tabled in April 2026, Finance Minister Jill Burridge said in the province's first-quarter Fiscal and Economic Update. The update, released Sept. 28, 2026, also shows the province's economy running ahead of budget assumptions in several areas.

The larger deficit reflects $53.4 million in increased expenditures in key areas including healthcare, social program funding, and the cost of diesel and heating fuel for schools due to impacts on the global supply chain, according to the update. Total revenues are forecast to rise by $22.9 million from the spring operating budget, largely due to HST recoveries and one-time federal funding to support housing.

The net-debt-to-GDP ratio, a key fiscal anchor in the province's debt management strategy, remains at the forecast 38.1 per cent. Net debt is forecast to decrease by $2.7 million by the end of the fiscal year compared with spring budget estimates.

We entered this fiscal year with a strong focus on what matters most - delivering direct affordability relief to Islanders, continuing the programs Islanders rely on, and making targeted investments in healthcare and education.Finance Minister Jill Burridge

The update points to an economy improving revenues. Average monthly employment for the first eight months of 2026 was up 3 per cent compared with the same period in 2025. Labour income grew 7.1 per cent year-to-date through June, above the 2026 budget forecast of 4 per cent, and average weekly earnings of $1,177 through June were up 5.3 per cent.

Retail sales grew 7.1 per cent, or $132 million, year-to-date through June, on track to exceed the budget forecast of 3 per cent. International goods exports were up 6.7 per cent year-to-date through July, largely reflecting growth in the repair category of special transactions trade.

Housing starts are up 24.6 per cent year-to-date through June, with multi-unit starts accounting for the increase, and industrial construction was up 74.4 per cent. Early tourism statistics show an increase in all categories of traffic to the Island as well as in overnight stays in both fixed roof accommodations and campgrounds.

Our Island business community is vital to our economic success and businesses have demonstrated innovation and drive at every turn. They create the jobs that support our families, support our communities, and supply the products the world is looking for.Finance Minister Jill Burridge

The 2025-2026 Public Accounts are currently being finalized, and the update says estimates are based on information available since the release of the 2026 spring operating budget. The update provides information on government's projected revenues and expenditures as factors change throughout the year, compiled from information provided by management and based on updated information and assumptions available since the budget was tabled.

The update does not state whether legislation is required to implement the forecast, and it does not give a date for the release of the 2025-2026 Public Accounts. The legislature's sitting status is not addressed in the update.