The Manitoba government's deficit has shot up sharply, due to a combination of higher spending and lower revenues.

The deficit this year, originally pegged at $363 million, is now forecast to end up at $1.6 billion.

A fiscal update from the Finance department says revenues are well below projected levels, due in part to losses at Manitoba Hydro.

The Crown-owned utility was expecting a profit this year, but changed its outlook to a loss after a dry summer reduced power-generating water levels.

On the spending side, expenses are running higher, driven in part by inflation, new health-care costs and recent collective agreements in the public sector.

There are also signs of a weaker economy, as personal and corporate income taxes are lower than expected.

This report by The Canadian Press was first published Dec. 5, 2023.