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  • Budget 2018: The Most Disappointing Budget Ever March 14, 2018
    Premier Pallister’s Trump-esque statement that budget 2018 was going to be the “best budget ever” has fallen a bit flat. Instead of a bold plan to deal with climate change, poverty and our crumbling infrastructure, we are presented with two alarmist scenarios to justify further tax cuts and a lack of decisive action: the recent […]
    Canadian Centre for Policy Alternatives
  • 2018 Federal Budget Analysis February 14, 2018
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis Some baby steps for dad and big steps forward for women, by Kate McInturff (CCPA) An ambition constrained budget, by David Macdonald (CCPA) Five things […]
    Canadian Centre for Policy Alternatives
  • CED in Manitoba - The Video January 29, 2018
    Community Economic Development in Manitoba - nudging capitalism out of the way?
    Canadian Centre for Policy Alternatives
  • With regional management BC’s iconic forest industry can benefit British Columbians rather than multinational corporations January 17, 2018
    Forests are one of the iconic symbols of British Columbia, and successive governments and companies operating here have largely focussed on the cheap, commodity lumber business that benefits industry. Former provincial forestry minister Bob Williams, who has been involved with the industry for five decades, proposes regional management of this valuable natural resource to benefit […]
    Canadian Centre for Policy Alternatives
  • Community Economic Development in Manitoba - a new film January 16, 2018
    Cinameteque, Jan 23.  7:00 pm - Free event Film Trailer CCEDNET-MB, CCPA-MB, The Manitoba Research Alliance and Rebel Sky Media presents: The Inclusive Economy:  Stories of Community Economic Development in Manitoba
    Canadian Centre for Policy Alternatives
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Saskatchewan Budget Saved by Falling Loonie

Following last week’s troubling news about potash, the Saskatchewan government released its first-quarter financial report today. The headline seems to be “Oil Keeps Budget in Black”, with a forecast increase in oil revenue more than offsetting a forecast decline in potash and other revenues.

But the forecast West Texas Intermediate price is only up by a couple of dollars since the provincial budget. A larger difference is that the forecast exchange rate has fallen from 99 to 96 US cents.

As shown at the bottom of page 4 (3 of 5 in the PDF), the forecast US-dollar price of oil is up by 2.4% from the budget estimate (i.e. $95.03/$92.84). But the Canadian-dollar price of oil is up by 6.3% (i.e. $80.01/$75.29). This comparison also includes changes in transport costs and/or grade differentials since the Canadian-dollar value is an average wellhead price.

However, the exchange rate’s effect is not limited to oil. The lower loonie has the same positive effect on the Canadian-dollar value of all commodities priced in US dollars.

The forecast-US dollar potash price is down by 5.8% (i.e. 1 – ($372/$395)). But the Canadian-dollar potash price is down by only 2.8% (i.e. 1 – ($636/$654)).

Indeed, the potash comparison purely reflects the three-point shift in the exchange rate. Both prices are mine netbacks, so there is no difference in transport costs. (Although the US price is per KCl tonne and the Canadian price is per K2O tonne, the physical ratio of KCl to K2O has not changed since the budget!)

While Premier Wall blasted federal NDP leader Tom Mulcair for questioning the overvalued loonie, Wall is now reaping the fiscal benefits of a slightly more moderate exchange rate.

I am not holding my breath for Wall to acknowledge that Mulcair had a point, although I note that he has come around to the NDP’s position on the Senate.

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