The NWT may have major federal investment on the way but is entering a “difficult economic transition,” finance minister Caroline Wawzonek said as she reported an unexpected deficit and published one of the territory’s biggest-ever capital budgets.
Wawzonek delivered two key messages in a Wednesday speech that illustrate what she called the “difficult balance” facing the territory. (The word “difficult” appeared four times in her address.)
The first: the GNWT expected an operating surplus of $20 million in 2026-27 but is now forecasting a deficit of $39 million.
The second: the territory has drawn up a capital budget for the year ahead – money for buildings, roads and other things that require planning and construction – worth more than $790 million, nearly double the previous one and multiple times the budget set aside in some other years.
More than $400 million in that capital budget is related to highways. Initial work on major projects like the Arctic Corridor and Mackenzie Valley Highway is included. How much of the spending will be funded through federal dollars isn’t clear.
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Wawzonek said the closure of multiple diamond mines and Imperial Oil’s Norman Wells oil field mean the territory expects its GDP – a key measure of economic output – to continue declining, even though employment and average earnings “have held up better than forecast.”
The territory now forecasts an operating deficit for this financial year because of extra spending on things like expensive diesel to compensate for low water levels in hydro power systems, as well as the cost of fighting wildfires. (This year was the third-worst so far this century in terms of area burned in the NWT.)
“Current projections indicate that operating expenditures will continue to grow faster than revenues, resulting in projected deficits over the medium term,” Wawzonek said.
“This is not a sustainable trajectory indefinitely.”
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The problem, she said, is the NWT needs to spend money to take advantage of the opportunities introduced by promised federal investment in major projects and military infrastructure.
That also means spending on the likes of education and healthcare so “residents are ready to maximize their potential,” said Wawzonek, but the territory is “trying to invest in this transformation at the same time that revenues are strained, costs are rising, and we still need to maintain the government’s long-term fiscal sustainability.”
The planned capital spending would mean $320 million in economic activity and support the equivalent of 1,750 full-time jobs, Wawzonek said, noting actual spending “will likely be much lower” than the capital estimates suggest because the timing of major projects depends on so many factors.
“As major federally supported projects advance, we need to ensure that the pace of investment matches the territory’s financial capacity and ability to deliver our part,” she said.
“That may require difficult decisions about project timing and priorities, but those decisions are necessary to protect long-term fiscal sustainability.
“We are entering a period of profound change. We cannot control every challenge that comes with it, but we can make choices that will help shape what comes next.”
