Preface

The Budget of the Republic of Newfoundland sets out the fiscal plan for 2026 and the forward years 2027–2028.
It aligns the nation’s resources with priorities in economic opportunity, maritime and Arctic sovereignty,
universal public services, and intergenerational stewardship through the Sovereign Fund.

Estimates tables accompany this web edition for transparency. Appropriations are subject to enactment
by the House of Assembly.

Minister’s Foreword

Budget 2026 is a plan for steady growth, disciplined finances, and stronger national security.
With real GDP expected to expand by 2.3% and inflation trending toward the
central bank’s medium-term objective, we project a modest surplus in 2026 and
surpluses across the forecast horizon. The Republic will continue modernizing clean energy and fisheries,
expanding digital infrastructure, and—crucially—sustaining and improving our long-standing systems of
universal education and universal medical and dental coverage.

In an increasingly uncertain global environment, the Republic must be ready to defend its sovereignty and fulfill
its commitments to collective security. Accordingly, this Budget increases Defence outlays from approximately
3% to 4% of GDP — the largest readiness investment in a generation — to secure Newfoundland in a dangerous world
and ensure that we meet our NATO obligations. This includes the development of an expeditionary brigade combat team
and acquisition of the N39E Gripen long-range interceptor fleet to augment allied air patrols operating from
Goose Bay and Gander. These measures strengthen deterrence and guarantee that the Republic can contribute meaningfully to peace.

We proceed with prudence: maintaining debt at prudent levels, funding long-life assets, implementing
full royalties on hydro, LNG, oil, fisheries, forests, and critical minerals, and continuing rule-based
deposits to the Sovereign Fund.

— Minister of Finance

Part I — Economic Context and Outlook

Global and Regional Setting

The global economy is expected to expand modestly in 2026 amid tighter financial conditions and
ongoing geopolitical tensions. Energy markets remain firm; shipping costs have moderated from recent peaks,
and advanced economies are converging toward low-to-mid single-digit nominal growth.

National Outlook

Newfoundland’s diversified Atlantic economy continues to benefit from hydropower exports, marine industries,
critical minerals, and data-center services. Private investment in hydrogen and rare-earth processing,
together with sustained public infrastructure, supports medium-term growth.

Risks

• External demand: slower partner-country growth could weigh on exports.
• Commodity prices: volatility in oil, LNG, and metals could affect revenues.
• Security environment: elevated tensions in the Euro-Atlantic region require higher readiness and investment.

Part II — Fiscal Framework and Summary Tables

Fiscal Strategy

The fiscal anchor remains a balanced budget over the cycle, debt within prudential limits,
and predictable transfers to the Sovereign Fund. Budget 2026 plans a modest surplus
while prioritizing defence, infrastructure, and human capital—sustaining our established
universal education and universal medical and dental systems—within a framework of
full natural-resource royalties. The financial operations of the Labrador Hydro and
Industrial Electrification Plan are consolidated in this budget.