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Government expects $794 million deficit in 2025-26 and maintains commitment to balance the budget by 2027-28.
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A $3.7 billion capital plan is unveiled—the largest in its history.
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Budget 2025 includes contingency allowances to address new trade-related spending initiatives.
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Revenues to surge 8% in 2025-26, outpacing the 5.5% increase to expenditures.
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Debt burden improves from Budget 2024 projections, peaking at 37.1% in 2026-27.
Manitoba’s Budget 2025 added more commitments to the ambitious fiscal plan rolled out last year. It announced a fleet of new measures, including payroll tax cuts and an increase to the homeowners’ tax credit, resulting in a budgetary shortfall of $794 million in 2025-26.
New promises come alongside a renewed commitment to balance the budget by fiscal 2027-28—a target that remains narrowly within reach. It also includes Manitoba’s largest capital plan in history with $3.7 billion in investments slated for fiscal 2025-26. The outlay is part of a larger $16.7 billion five-year plan, primarily focused on new infrastructure projects such as building schools and healthcare centres.
Revenue to surge contingent on international trade relations
Revenues are expected to jump $1.9 billion (8.1%) in 2025-26 as the economic recovery ushers in higher tax revenues—particularly from individual income.
The economic growth assumptions underpinning the fiscal plan are slightly more optimistic than ours, and do not account for an escalation of ongoing trade disruptions. Imminent trade risks from the U.S. and China add downside risks to the revenue outlook.
If proposed 25% U.S. tariffs were to materialize, the government estimates revenues could shrink by up to $559 million in 2025-226—deepening the deficit to at least $1.4 billion in the upcoming fiscal year.
Economic growth assumptions
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Real GDP growth (%) | |||
| Budget 2025 | 1.1 | 1.7 | 1.7 |
| Budget 2024 | 0.6 | 1.9 | |
| RBC | 1.2 | 1.4 | 1.5 |
| Nominal GDP growth (%) | |||
| Budget 2025 | 3.8 | 3.6 | 3.4 |
| Budget 2024 | 2.9 | 3.1 | |
| RBC | 4.3 | 3.2 | 2.9 |
Source: Manitoba Ministry of Finance, RBC Economics
Despite these risks, Budget 2025 built on the tax reforms included in last year’s fiscal plan. Payroll (Health and Post Secondary Education Tax Levy) tax cuts were announced for businesses, reducing annual revenue by $8.5 million. A $100 increase to the homeowner affordability tax credit was also announced, costing $19 million annually in forgone revenue.
The cost of these new measures, however, will be more than offset by increased revenue from the freezing of the basic personal amount and tax bracket threshold indexation, which is set to generate an additional $82 million annually in revenue.
Spending to slow down following another big increase
Expenditures are projected to grow by $1.3 billion (5.5%) in 2025-26 with two-thirds of the increase allotted to healthcare ($670 million) and education ($276 million).
Following another year of significant spending, the government intends to slow expenditure growth to roughly 2% annually over the next two years. Delivering on this plan will be critical to meeting the budgetary balance commitment.
Manitoba’s consolidated fiscal plan
| ($ millions) | Estimate | Forecast | ||
|---|---|---|---|---|
| 2024/25 | 2025/26 | 2026/27 | 2027/28 | |
| Total revenues | 23,367 | 25,256 | 26,128 | 26,982 |
| Total expenditures (before provisions) | 24,506 | 25,850 | 26,405 | 26,922 |
| Program expenses | 22,173 | 23,513 | 23,973 | 24,444 |
| Debt servicing costs | 2,333 | 2,337 | 2,432 | 2,478 |
| Contingency reserve | 100 | 200 | 50 | 50 |
| Surplus/(Deficit) | -1,239 | -794 | -327 | 10 |
| Net Debt-to-GDP (%) | 36.1 | 36.9 | 37.1 | 36.8 |
Source: Manitoba Ministry of Finance, RBC Economics
Debt burden improves from previous plan
The net debt-to-gross domestic product ratio is lower under the new fiscal plan, peaking at 37.1% in fiscal 2026-27 before settling to 36.8% in 2027-28.
This marks an improvement from the previous plan, but Manitoba’s debt load remains relatively high by historical standards. Net debt-to-GDP ratios exceeding 30% are a relatively new phenomenon over the last decade. Closely monitoring this upward trajectory will be essential for maintaining a sustainable fiscal path.
Rachel Battaglia is an economist at RBC. She is a member of the Macro and Regional Analysis Group, providing analysis for the provincial macroeconomic outlook and budget commentaries.
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