First quarter update provides early results, shows resilient economy

The Minister of Finance Jill Burridge has released PEI’s first-quarter Fiscal and Economic Update for the 2026-2027 fiscal year. 

This information provides an early update on provincial finances and the economy as government works to manage the cost of living for Islanders and implement their prudent fiscal plan to manage expenditures and debt.

"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 current forecast for fiscal year 2026-2027 is a deficit of $440.4 million, a $30.5 million increase from the 2026-2027 operating budget tabled in April 2026. This reflects increased expenditures totaling $53.4 million 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.

Total revenues are forecasted to increase by $22.9 million from last spring’s operating budget and the net-debt-to-GDP ratio, a key fiscal anchor in the debt management strategy, remains at the forecast 38.1 per cent. The net debt is forecast to decrease by $2.7 million by the end of the 2026-2027 fiscal year, compared to the spring budget estimates. 

While expenditures have increased, the update shows PEI’s strong and resilient economy is improving revenues. Highlights include: 

  • Average monthly employment for the first eight months of 2026 was up 3 per cent compared to the same period in 2025.
  • Labour income grew 7.1 per cent year-to-date through June, trending above the 2026 budget forecast of 4 per cent. 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,” said Minister Burridge. "They create the jobs that support our families, support our communities, and supply the products the world is looking for."

The 2025-2026 Public Accounts are currently being finalized and estimates included in this update are based on the information available since the release of the 2026 spring operating budget. 

Media contact:
Janice Fogarty
Department of Finance and Affordability 
jefogarty@gov.pe.ca

                

Backgrounder 

2026-2027 First Quarter Fiscal Update

The fiscal update provides information on government’s projected revenues and expenditures as factors change throughout the year. The forecast has been compiled from information provided by management and is based on updated information and assumptions available since the budget was tabled. 

  • Current forecast for 2026-2027 indicates a deficit of $440.4 million. This represents an increase of $30.5 million compared to the deficit plan of $409.9 million outlined in the 2026-2027 Budget Estimates. 
  • Total revenues are forecasted to increase by $22.9 million from the 2026-2027 Budget Estimates. This increase is largely due to HST recoveries, and one-time Federal funding to support housing.
  • Total expenditures are forecasted to increase by $53.4 million from the 2026-2027 Budget Estimates prepared in the spring of 2026.

Supplementary Departmental Summary

  • Health PEI is forecasting an increase in expenditures of $39.2 million for their Operating Budget. Key pressures include agency staffing, wage levies and salary premiums, out-of-province contracted services, and medical supplies. These pressures are partially offset by salary vacancies/savings and delayed implementation of initiatives.
  • The Department of Social Development and Seniors is anticipating an increase in expenditures of $4.8 million compared to Budget. This is primarily driven an increase in AccessAbility Supports caseload growth, and pressures in the Seniors Hearing Aid Rebate Program, partially offset by a decrease in Social Assistance as clients transition to the AccessAbility Support Program.
  • The Department of Health and Wellness is forecasting an expenditure increase of $4.7 million, driven by the PEI Alliance for Mental Wellbeing wind-up grant commitments (offset by revenue recoveries from the Alliance) and an increase in caseload growth for the At Home Caregiver Benefit.
  • Public Schools Branch and La Commission scolaire de langue française are forecasting a combined $1.4 million increase due to high diesel and heating fuel prices driven by global supply chain disruptions.
  • The Department of Transportation, Infrastructure and Energy is forecasting a net decrease in expenditures of $1.5 million. The reduction is driven by a decrease in infrastructure grants due to delayed projects, partially offset by an increase under the Oil to Heat Pump Affordability Program and in highway and bridge maintenance costs

 

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