Nova Scotia’s first budget update of 2008-09 forecasts a $166-million increase in the provincial surplus by year end. Finance Minister Michael Baker said while the budget results are positive for the year so far, changing economic factors may affect future results. “Our budget is ahead of its targets at this point in the year,” said Mr. Baker. “However, the rising cost of energy and changing international economic conditions pose risks for the next forecast.” The province is forecasting a 2008-09 budget surplus of $355 million, $166 million higher than the budget estimate in April. Total revenues, including net income from government business enterprises, are forecast to be $8.7 billion, $188 million more than budgeted. This is primarily due to higher petroleum royalties and the federal crown share adjustment payment. Total expenses are forecast to be $8.4 billion, $18 million more than budgeted. Additional spending in key program areas is offset slightly by lower debt servicing costs. Although the forecast includes $128 million more than budgeted for debt reduction, other budget pressures may require the government to adjust the final amount that goes on the debt. “We are pleased with the results we have to date,” said Mr. Baker. “However, we will monitor potential changes through the year as needed to make sure we end the year in a strong position.” Nova Scotia’s economic growth is consistent with the budget projections, with real Gross Domestic Product for 2008 unchanged at 1.7 per cent. Inflation is expected to be higher than assumed at budget time, with the Consumer Price Index at 3.1 per cent in 2008 versus the budget projection of 2.0 per cent. The rise in inflation is primarily a result of higher energy prices. A copy of the forecast update is on the Department of Finance website at www.gov.ns.ca/finance .