Over the past two months, Canadian provincial governments have released their 2026 budgets, and several constructive takeaways have emerged that shed light on how they're navigating economic uncertainty, said Laurentian Bank Securities.
According to the bank, here are a few of them:
-- FY 2025-26 ended with the showing of fiscal resilience for most provinces, including Quebec and Ontario, despite the United States trade conflict.
-- FY 2026-27 and beyond, provincial governments propose constructive baseline scenarios pointing to a narrowing of annual deficits in most cases.
-- Given the unpredictable global upheaval, provinces have put aside comfortable fiscal buffers totalling near $13 billion in FY 2026-27 alone.
-- A slow recovery of global oil traffic flow and insufficient global supply alternatives may eliminate FY 2026-27 deficits in oil-producing provinces.
-- The 2026 budget season exposed a wide range of paths for total expenses reflecting various realities with respect to demographic pressures and public policy priorities.
-- Provincial governments deal with the growing trade-off of protecting their economy with large capital spending plans without losing sight of long-term financial sustainability.
-- The other "gentle trade-off" relates to prioritizing the building of new public assets or repairs on existing assets, given the presence of large maintenance deficits.
-- Climate shocks are testing fiscal resilience. Selected provinces registered higher costs last year due to wildfires and droughts. Experts see the possible return of a strong El Nino during FY 2026-27.
-- Governments are pushing forward development of geostrategic projects, including defense, oil, liquefied natural gas, hydro, nuclear, solar and wind power.