Mr. Speaker, thank you for the opportunity to provide the Legislative Assembly with this fall economic and fiscal update. I will also use this opportunity to outline our progress towards the goals set out in our fiscal strategy.
Our work towards restoring balance through this government's fiscal strategy meant that we started the fiscal year with the GNWT's largest-ever projected operating surplus. We have been trimming longstanding unfilled public service positions, consolidating programs that were inefficiently split between departments, and identifying underspent funds that could be reduced from our budget. We are well underway with the fleet management program and a lease space review.
However, Mr. Speaker, despite these efforts, the fiscal situation facing the Government of the Northwest Territories is dire. Despite the hard work departments have done to find value for money, the actions taken under our fiscal sustainability strategy have not been enough to absorb the multiple fiscal challenges that have arisen since the tabling of the 2024-2025 Main Estimates.
Efforts to maintain the resiliency of the energy grid, rising costs within the health system, and wildfire expenditures have resulted in our total debt being projected to reach $1.74 billion. As a result, we will breach the $120 million buffer below the federally imposed $1.8 billion limit as outlined in our fiscal responsibility policy. We are, therefore, in the process of requesting a borrowing limit increase from the Government of Canada.
Requesting a borrowing limit increase is necessary to ensure we have the capacity to respond to expenditure shocks that have become more frequent. However, seeking this flexibility in our borrowing room does not mean that we can ease off on our own efforts to ensure fiscal responsibility and sustainability. We will continue to evaluate the value of all programs and services, keep a close eye on public sector growth, and find innovative ways to achieve efficiencies.
Mr. Speaker, we are all acutely aware of the impending diamond mine closures but for now, the Northwest Territories' economy remains stable. Over the last three years, since the 2020 lows caused by COVID-19 restrictions, the economy has broadly recovered. Indicators such as household spending, public expenditure, and resident employment have expanded to surpass pre-pandemic levels. Even after the sharp shocks of last year's severe wildfire season, the economy was resilient enough to fully recover to pre-wildfire levels by December.
Mineral exploration investments and appraisal spending intentions are up 27 percent in 2024. However, exploration spending is no guarantee of an operating mine, and the North remains a higher-cost jurisdiction compared to more southern locations. Further, we are forecasting real gross domestic product to shrink this year due to overall slower activity in the mining and oil and gas sectors. That said, other economic measures remain robust, including high employment and a fall in consumer price inflation to less than 2 percent.
The upside of having an economy heavily weighted toward the public sector across all levels of government is that government spending and public sector employment continue to stabilize the economy. In addition to the rise in exploration spending, the GNWT supported the new commercial fish plant in Hay River, which is now open. We have also provided financial support to communities affected by the summer wildfires and barge cancellations, helping local economies remain resilient in the face of ongoing climate shocks. We must continue to help all Northwest Territories communities enhance their distinct economic strengths and address labour shortages, both for skilled and unskilled workers.
Mr. Speaker, we finished 2023-2024 in better shape than expected, primarily due to federal disaster relief funding. However, we still ended the year in a deficit position due to the tremendous financial pressures created during the summer of 2023. Although the cash position going into the 2024-2025 fiscal year was an improvement, it did not actually improve the 2024-2025 fiscal situation as some federal funding expected this year was received last year.
Mr. Speaker, you will recall that we started this fiscal year with the largest projected operating surplus in history $294 million. This was expected to fully cover the 2024-2025 capital budget without the need for additional borrowing, and we hoped to use it to pay down some of our short-term debt. It is fortunate that we worked to achieve this surplus because, once again, the fiscal shocks of various extreme events have reduced our forecasted surplus to $67 million. One such extreme event is the ongoing low water situation. Since the 2024-2025 budget was released in May, the situation has worsened. Marine Transportation Services lost almost $14 million in revenue due to the canceled barge season, and increased costs associated with resupply challenges are being felt across multiple departments.
Low water has also impacted the Northwest Territories Power Corporation's, or NTPC's, generating costs. These impacts were magnified by reliance on diesel during the overhaul of the original Taltson generating facility, a project that was well overdue. This project was on time and on budget until the 2023 wildfires caused the evacuation of key personnel and damaged NTPC infrastructure. Getting the work back on track has led to cost overruns, which are now projected to reach $31 million. Between the costs of diesel backup and the Taltson overhaul, NTPC needs to borrow another $75 million in short-term debt.
While not as severe as 2023, this summer saw yet another challenging fire season, with two communities in the Sahtu evacuated and several others across the territory under evacuation alerts. We also continue to face significant cost pressures to maintain stability in the health care system, which is treating more patients, many of whom have more complex needs.
In order to absorb all of these impacts, we currently project that we will end the fiscal year with $700 million in short-term borrowing. This increase in short-term borrowing, combined with the additional $75 million required by NTPC, brings our total authorized debt to $1.74 billion, just $60 million below the federally imposed $1.8 billion borrowing limit. As noted earlier, we have begun the process of requesting a borrowing limit increase to ensure we have the necessary room to absorb further expenditure shocks.
Mr. Speaker, as I have said before, and will emphasize again: Even in the face of these challenges, I remain optimistic when looking at the long-term potential of the Northwest Territories economy and our ability to restore balance to the GNWT's fiscal health.
The recent trip to Ottawa with the Council of Leaders highlighted the strength of collaboration between governments in the Northwest Territories. This collaboration does not detract from the many challenges we face at home, but it is through collaboration and cooperation that we can raise the profile and prosperity of our territory.
Commodity markets may be depressed at the moment, but this buys us time to deliver foundational infrastructure that will make the Northwest Territories a stronger candidate for large-scale mineral resource investments. It also allows us time to highlight the investment stability in our co-management regime for land and natural resources. Finally, this time gives us the opportunity to continue seeking national attention for strategic investments in key projects that will support critical mineral value chains.
We are also seeing much needed attention paid to the vast stretch of border that faces international waters toward Russia and China. While this poses a defense risk today, it is also an opportunity for multi-use infrastructure investments that will not only enhance the North's strategic capabilities but also benefit people on a day-to-day basis, strengthening the region overall.
Finally, within our own fiscal house, we remain committed to the Restoring Balance fiscal strategy, but we will take the time necessary to ensure we get it right. We still have promising suggestions from the GNWT's public service in progress, and others already being implemented. While the short-term fiscal situation is tight, we will avoid kneejerk actions that could unnecessarily disrupt government programs or services causing more severe impacts on residents, businesses, or the overall economy.
We continue to seek opportunities to lapse unnecessary spending in 2024-2025, aiming to end the year in better fiscal shape than we are in now. A key focus as we move forward with Restoring Balance is addressing health care system sustainability, which remains an area of high financial risk and high need. In line with the government's mandate, a large part of determining sustainable service levels is defining our core programs and services. This work is being led by the health care system sustainability unit within the Department of Executive and Indigenous Affairs. They are taking an evaluative approach to the health and social services system, focusing on determining sustainable service levels and exploring opportunities for greater efficiencies.
Mr. Speaker, we knew there would be significant fiscal challenges coming into this Legislative Assembly, and we know we have difficult choices leading up to next year's budget. We are also keenly aware of the obligation and expectation to achieve the priorities set by this Legislative Assembly. Within that priority framework, we remain committed as a government to supporting immediate needs in times of crisis, maintaining core programs and services for residents and communities, while also being vigilant in creating and enabling long-term growth opportunities. Thank you, Mr. Speaker.
Thank you to the Minister of Finance for her Minister's statement. Any further Ministers' statements?
