Expect a deficit, Kennedy tells business audience

The Newfoundland and Labrador government will not steer away from a program of public investment in the face of the global financial crisis, the finance minister said Thursday.

Speaking to a business convention in St. John's, Jerome Kennedy said the recession will also notcause a change in government's fiscal plans, which have included a focus on infrastructure and debt reduction.

Kennedy said, however, that the government will likely not be able to cut debt further in the coming fiscal year, as it will have to run a deficit if oil prices remain low.

"The message I am giving is that we are maintaining the course," Kennedy said.

"We are not simply going to try to spend our way out of this recession. We are going to continue that which we have been doing."

The Newfoundland and Labrador government has been posting large surpluses during recent years, largely because of rising oil prices and ancillary taxes and revenues.

But Kennedy said that key signs show the provincial economy is still in good shape, highlighting new home construction and retail sales as examples.

In December, Kennedy said government expected to finish the current fiscal year with a $1.27-billion surplus, which he said would be put toward debt retirement.