----

The Honourable Rod Gantefoer        Minister of Finance

        SASKATCHEWAN BUDGET UPDATE

**08-09**

READY FOR GROWTH

**1ST QUARTER        FINANCIAL REPORT**

----

----

----

1st Quarter Financial Report        Government of Saskatchewan        Ministry of Finance        July 31, 2008

----

----

**1st Quarter Financial Report**        General Revenue Fund Update

----

**INTRODUCTION**

The first quarter revenue update primarily reflects adjustments arising from non-renewable resource revenue being significantly higher than anticipated at budget.

The increase in revenue is $3.1 billion, of which $2.6 billion relates to higher forecasts for oil and potash prices as well as Crown land sales. Federal funding from the Carbon Capture and Storage Demonstration Trust accounts for $240 million of the increase from budget.

Income tax revenue is generally updated at the second and third quarter reports, coinciding with data received primarily from the federal government related to tax return assessments processed to that point in the year.

The first quarter expense update primarily reflects the flow-through of the $240 million in federal Carbon Capture funding to CIC, and $70 million provided to regional health authorities for the recent contract settlement with nurses.

As required by *The Growth and Financial Security Act*, one-half of the $3.0 billion pre-transfer surplus is forecast to be transferred to the Growth and Financial Security Fund, leaving $1.5 billion remaining as a General Revenue Fund surplus.

The improved financial position of the GRF is being reflected by a reduction in the government total debt forecast. The $250 million debt reduction commitment in the 2008-09 budget has been met, and is forecast to increase by the application of the 2007-08 surplus of $641 million and the $1,259.6 million first quarter improvement in the GRF surplus.

As a result, government total debt is now forecast to decrease by $2.2 billion relative to the 2007-08 debt level.

----

1st Quarter Financial Report/GRF Update   1

----

----

**FINANCIAL OVERVIEW**

At the first quarter of 2008-09, the General Revenue Fund (GRF) pre-transfer surplus is forecast to be $3.0 billion, an increase of $2.8 billion from budget. As required by *The Growth and Financial Security Act*, 50 per cent of the pre-transfer surplus is forecast to be transferred to the Growth and Financial Security Fund (GFSF), leaving a forecast GRF surplus of $1.5 billion.

Total revenue is forecast to be $12.5 billion, an increase of $3.1 billion from budget.

Operating expense is forecast to be $8.9 billion, an increase of $352.4 million from budget.

Debt servicing costs are forecast to be $510.0 million, a decrease of $25.0 million from budget.

| 2008-09 GRF Financial Summary                                                                                     |
|-------------------------------------------------------------------------------------------------------------------|
||
||
| Revenue                                                                                                           |   |   | $ | 9,366.5 |  | $ | 12,463.4 |  | $ | 3,096.9 |  |
| Operating Expense*                                                                                                |   |   |   | 8,581.9 |   |   | 8,934.3 |   |   | 352.4 |   |
| Operating Surplus                                                                                                 |   |   |   | 784.6 |   |   | 3,529.1 |   |   | 2,744.5 |   |
| Debt Servicing                                                                                                    |   |   |   | 535.0 |   |   | 510.0 |   |   | (25.0 | ) |
| Pre-transfer Surplus                                                                                              |   |   |   | 249.6 |   |   | 3,019.1 |   |   | 2,769.5 |   |
| Transfer to GFSF                                                                                                  |   |   |   | (124.8 | ) |   | (1,509.6 | ) |   | (1,384.8 | ) |
| Transfer from GFSF                                                                                                |   |   |   | 125.2 |   |   | -- |   |   | (125.2 | ) |
| **GRF Budget Balance**                                                                                            | ** ** | ** ** | **$** | **250.0** |   | **$** | **1,509.6** |   | **$** | **1,259.6** |   |
| * Budget Estimate includes $10.4M provided to the Ministry of Municipal Affairs by Further Estimates.   |
| **GFSF Balance****                                                                                                |   |   | **$** | **1,634.0** |   | **$** | **3,143.6** |   | **$** | **1,509.6** |   |
| **2008-09 opening balance = $1,634.0 million.                                                           |

The GFSF balance is forecast to be $3.1 billion at the end of 2008-09, reflecting the opening balance of $1.6 billion being increased by $1.5 billion, or 50 per cent of the forecast pre-transfer surplus.

Government total debt is forecast to be $4.7 billion, a decrease of $2.2 billion from budget.

Crown corporation total debt is forecast to be $3.9 billion – an increase of $0.5 billion from budget.

Including Crown corporation total debt, GRF total debt is forecast to be $8.6 billion – a decrease of $1.7 billion from budget.

----

2   1st Quarter Financial Report/GRF Update

----

----

**REVENUE UPDATE**

At the first quarter, GRF revenue is forecast to increase $3.1 billion from the 2008-09 Budget Estimate almost entirely due to substantial increases in non-renewable resource revenue as a result of much higher prices.

| Revenue Reconciliation            |
|-----------------------------------|
||
|                              |   |   |   |   |   |
| **Budget Estimate**               | ** ** | ** ** | **$ 9,366.5** |   |   |
| **Own-Source Revenue Changes**    |   |   |  |  |  |
| Potash                            |   |   | +1,007.2 |   |   |
| Crown Land Sales                  |   |   | +799.7 |   |   |
| Oil                               |   |   | +745.2 |   |   |
| Sales Tax                         |   |   | +107.5 |   |   |
| Natural Gas                       |   |   | +65.6 |   |   |
| Interest                          |   |   | +58.9 |   |   |
| Other net changes                 |   |   | +6.8 |   |   |
| **Total Own-Source Change**       |   |   | **+2,790.9** |   |   |
|                              |   |   |   |   |   |
| **Total Federal Transfer Change** |   |   | **+306.0** |   |   |
|                              |   |   |   |   |   |
| **Total Change**                  |   |   | **+3,096.9** |   |   |
|                              |   |   |   |   |   |
| **1st Quarter Forecast**          |   |   | **$ 12,463.4** |   |   |

Total non-renewable resource revenue is up $2.6 billion, including revenue from potash ($1.0 billion), Crown land sales ($0.8 billion), oil ($0.7 billion), and natural gas ($65.6 million). Other non-renewable resource revenue is forecast to be $42.2 million lower.

Potash, Crown land sales and oil forecast details can be found in the Appendix.

Tax revenue is up $136.0 million, including increases in Sales Tax ($107.5 million), Corporation Capital Tax ($20.0 million from the resource surcharge component) and Tobacco Tax ($8.5 million) as the result of continued strength in the Saskatchewan economy.

Transfers from Crown entities are $18.1 million higher, while other own-source revenue is $61.3 million higher primarily due to increased interest earnings.

Federal transfers are forecast to increase $306.0 million, largely reflecting four federal trust funds, including the Carbon Capture and Storage Demonstration Trust ($240.0 million), Community Development Trust ($36.4 million), Public Transit Capital 2008 Trust ($14.9 million), and the Police Officers Recruitment Trust ($11.7 million).

| Fiscal-year Non-renewable Resource Forecast Assumptions |
|---------------------------------------------------------|
||
| **Crown Land Sales**                                    |   | Oil and Natural Gas Rights ($ millions) |    | 192.5 |   | 992.2 |   |
|                                                    |   | WTI Oil Price (US$ per barrel) |   | 82.36 |  | 119.78 |  |
| **Oil**                                                 |   | Exchange Rate (US cents) |   | 99.45 |  | 99.56 |  |
|                                                    |   | Production (million barrels) |    | 156.6 |   | 156.6 |   |
| **Natural**                                             |   | Fieldgate Price (C$ per gigajoule) |   | 6.55 |  | 9.35 |  |
| **Gas**                                                 |   | Production (billion cubic feet) |   | 240.4 |   | 235.1 |   |
| **Potash**                                              |   | - Average Price (per K20 tonne)
- Production (million tonnes) |   | - 335.28
- 11.17 |   | - 718.48
- 11.39 |   |

----

1st Quarter Financial Report/GRF Update   3

----

----

**EXPENSE UPDATE**

At the first quarter, provincial total expense is forecast to be up $327.4 million from the 2008-09 Budget Estimate.

| Expense Reconciliation              |
|------------------------------------------|
||
|                                     |   |   |   |   |   |
| **Budget Estimate**                      | ** ** | ** ** | **$ 9,116.9** |   |   |
| **Expense Changes**                 |   |   |  |  |  |
| Carbon Capture Trust transfer            |  |  |  |  |  |
|     to CIC                |   |   | +240.0 |   |   |
| Health                                   |   |   | +70.0 |   |   |
| Agriculture                              |   |   | +22.6 |   |   |
| First Nations and Métis Relations |   |   | +13.0 |   |   |
| Other                                    |   |   | +6.8 |   |   |
| Operating Expense Change                 |   |   | +352.4 |   |   |
| Debt Servicing                           |   |   | -25.0 |   |   |
| **Total Change**                         |   |   | **+327.4** |   |   |
|                                     |   |   |   |   |   |
| **1st Quarter Forecast**                 |   |   | **$ 9,444.3** |   |   |

Operating expense is forecast to be up $352.4 million from budget, reflecting:

| • | a transfer of $240.0 million to Crown Investments Corporation of Saskatchewan (CIC) for federal carbon capture funding; |
|--------|-------------------------------------------------------------------------------------------------------------------------|

| • | $70.0 million in Health due to increased funding for regional health authorities for a recent settlement with nurses; |
|--------|-----------------------------------------------------------------------------------------------------------------------|

| • | $22.6 million in Agriculture primarily related to an increase in projected Crop Insurance premiums due to an increase in acres covered, shift towards higher value crops and an increase in the average coverage level; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | $13.0 million in First Nations and Métis Relations primarily related to higher transfers to gaming trusts due to increased gaming revenue. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

All other increases in the operating expense forecast total $6.8 million. The two largest changes are:

| • | $4.3 million in Corrections, Public Safety and Policing primarily due to increases for claims under the Provincial Disaster Assistance Program, adult corrections inmate count management and higher Information Technology Office (ITO) costs; and, |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | $1.4 million in Enterprise and Innovation due to project funding for Hydrogen Technologies Corp which was not incurred in 2007-08. |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

Servicing government debt is forecast to be $25.0 million under budget mainly due to reduced in-year borrowing requirements.

----

4   1st Quarter Financial Report/GRF Update

----

----

**DEBT UPDATE**

The GRF borrows for government and Crown corporations. Total debt is composed of gross debt less sinking funds plus guaranteed debt.

**Government total debt** is forecast to be $4.7 billion – a decrease of $2.2 billion from 2007-08.

| Government Total Debt       |
|----------------------------------|
||
||
|                             |   |   |   |   |   |
| **2007-08 Actual**               | ** ** | ** ** | **$ 6,848.7** |   |   |
| 2007-08 surplus                  |   |   | -641.4 |  |  |
| Budgeted 2008-09 surplus         |   |   | -250.0 |   |   |
| Increase in 2008-09 surplus      |   |   | -1,259.6 |   |   |
| Total Change                     |   |   | -2,151.0 |   |   |
|                             |   |   |   |   |   |
| **2008-09 1st Quarter Forecast** |   |   | **$ 4,697.7** |   |   |

The decrease reflects applying the $641.4 million surplus from 2007-08 to debt reduction, plus the $250.0 million debt reduction commitment from the 2008-09 budget, plus $1,259.6 million in debt reduction from the increase in the 2008-09 surplus from budget.

The 2008-09 Budget estimated a $207.2 million reduction in government total debt.

The first quarter forecast thus represents an improvement of over $1.9 billion relative to the budget estimate, largely reflecting the application of the 2007-08 surplus and the increase in the 2008-09 surplus to government debt reduction.

Crown corporations are responsible for the principal and interest payments on their debt. Crown corporation debt is incurred in the normal course of business, primarily for investment in infrastructure and business development initiatives which provide revenue streams to service the debt.

**Crown corporation total debt** is forecast to be $3.9 billion – an increase of $492.8 million from 2007-08.

At the first quarter of 2008-09, **GRF total debt**, including Crown corporation debt, is forecast to be $8.6 billion – a decrease of $1.7 billion from 2007-08.

| Total Debt Summary           |
|------------------------------|
||
||
||
||
| Crown Corporation Total Debt |    |    | $ | 3,395.2 |   | $ | 3,888.0 |   | $ | 492.8 |   |
| Government Total Debt        |   |   |   | 6,848.7 |   |   | 4,697.7 |   |   | (2,151.0 | ) |
| **Total Debt**               |   |   | **$** | **10,243.9** |   | **$** | **8,585.7** |   | **$** | **(1,658.2** | ) |

 

----

1st Quarter Financial Report/GRF Update   5

----

----

| 2008-09 1st Quarter Financial Report                Province of Saskatchewan                General Revenue Fund                Statement of Revenue |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
||
||
||
|                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
| Corporation Capital                                                                                                                                  |   |   | $ | 444,100 |   | $ | 464,100 |   | $ | 20,000 |   |
| Corporation Income                                                                                                                                   |   |   |   | 616,500 |   |   | 616,500 |   |   | -- |   |
| Fuel                                                                                                                                                 |   |   |   | 413,300 |   |   | 413,300 |   |   | -- |   |
| Individual Income                                                                                                                                    |   |   |   | 1,932,000 |   |   | 1,932,000 |   |   | -- |   |
| Sales                                                                                                                                                |   |   |   | 979,800 |   |   | 1,087,300 |   |   | 107,500 |   |
| Tobacco                                                                                                                                              |   |   |   | 183,800 |   |   | 192,300 |   |   | 8,500 |   |
| Other                                                                                                                                                |    |   |   | 109,500 |    |    | 109,500 |   |     | -- |    |
| **Taxes**                                                                                                                                            | **  ** | **  ** | **$** | **4,679,000** | ** ** | **$** | **4,815,000** | ** ** | **$** | **136,000** |   |
| Crown Land Sales                                                                                                                                     |   |   | $ | 192,500 |   | $ | 992,200 |   | $ | 799,700 |   |
| Natural Gas                                                                                                                                          |   |   |   | 118,000 |   |   | 183,600 |   |   | 65,600 |   |
| Oil                                                                                                                                                  |   |   |   | 1,054,600 |   |   | 1,799,800 |   |   | 745,200 |   |
| Potash                                                                                                                                               |   |   |   | 352,600 |   |   | 1,359,800 |   |   | 1,007,200 |   |
| Other                                                                                                                                                |   |   |    | 189,200 |   |    | 147,000 |   |    | (42,200 | ) |
| **Non-Renewable Resources**                                                                                                                          | ** ** | ** ** | **$** | **1,906,900** | ** ** | **$** | **4,482,400** | ** ** | **$** | **2,575,500** |   |
| Crown Investments Corporation of Saskatchewan                                                                                                        |   |   | $ | 185,000 |   | $ | 185,000 |   | $ | -- |   |
|     - Special Dividend                                                                                                                |   |   |   | 365,000 |   |   | 365,000 |   |   | -- |   |
| Saskatchewan Liquor and Gaming Authority                                                                                                             |   |   |   | 383,600 |   |   | 401,700 |   |   | 18,100 |   |
| Other Enterprises and Funds                                                                                                                          |   |   |   | 34,800 |   |    | 34,800 |   |    | -- |   |
| **Transfers from Crown Entities**                                                                                                                    | ** ** | **  ** | **$** | **968,400** | ** ** | **$** | **986,500** | **  ** | **$** | **18,100** |   |
| Fines, Forfeits and Penalties                                                                                                                        |   |   | $ | 10,200 |   | $ | 10,200 |   | $ | -- |   |
| Interest, Premium, Discount and Exchange                                                                                                             |   |   |   | 92,400 |   |   | 151,300 |   |   | 58,900 |   |
| Motor Vehicle Fees                                                                                                                                   |   |   |   | 141,500 |   |   | 141,500 |   |   | -- |   |
| Other Licences and Permits                                                                                                                           |   |   |   | 34,700 |   |   | 34,700 |   |   | -- |   |
| Sales, Services and Service Fees                                                                                                                     |   |   |   | 91,100 |   |   | 93,500 |   |   | 2,400 |   |
| Transfers from Other Governments                                                                                                                     |   |   |   | 16,800 |   |   | 16,800 |   |   | -- |   |
| Other                                                                                                                                                |   |   |   | 40,000 |   |   | 40,000 |   |   | -- |   |
| **Other Revenue**                                                                                                                                    | ** ** | ** ** | **$** | **426,700** | ** ** | **$** | **488,000** | ** ** | **$** | **61,300** |   |
| **Own-Source Revenue**                                                                                                                               | ** ** | **  ** | **$** | **7,981,000** | **  ** | **$** | **10,771,900** | ** ** | **$** | **2,790,900** |   |
| Canada Health Transfer                                                                                                                               |   |   | $ | 810,900 |   | $ | 810,900 |   | $ | -- |   |
| Canada Social Transfer                                                                                                                               |   |   |   | 335,000 |   |   | 335,000 |   |   | -- |   |
| Other                                                                                                                                                |   |   |   | 239,600 |   |   | 545,600 |   |   | 306,000 |   |
| **Transfers from the Government of Canada**                                                                                                          | ** ** | ** ** | **$** | **1,385,500** | ** ** | **$** | **1,691,500** | ** ** | **$** | **306,000** |   |
| **Revenue**                                                                                                                                          | **  ** | ** ** | **$** | **9,366,500** | ** ** | **$** | **12,463,400** | ** ** | **$** | **3,096,900** |   |

----

6   1st Quarter Financial Report/GRF Update

----

----

| 2008-09 1st Quarter Financial Report                    Province of Saskatchewan                    General Revenue Fund                    Statement of Expense |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
||
||
| **Executive Branch of Government**                                                                                                                               |   |   |   |  |   |   |  |   |   |  |   |
| Advanced Education, Employment and Labour                                                                                                                        |   |   | $ | 761,014 |   | $ | 761,014 |   | $ | -- |   |
| Agriculture                                                                                                                                                      |   |   |   | 302,805 |   |   | 325,365 |   |   | 22,560 |   |
| Corrections, Public Safety and Policing                                                                                                                          |   |   |   | 291,878 |   |   | 296,145 |   |   | 4,267 |   |
| Education                                                                                                                                                        |   |   |   | 992,231 |   |   | 992,881 |   |   | 650 |   |
| - Teachers' Pensions and Benefits                                                                                                                                |   |   |   | 194,083 |   |   | 194,083 |   |   | -- |   |
| Energy and Resources                                                                                                                                             |   |   |   | 38,551 |   |   | 38,551 |   |   | -- |   |
| Enterprise and Innovation                                                                                                                                        |   |   |   | 60,131 |   |   | 61,525 |   |   | 1,394 |   |
| Environment                                                                                                                                                      |   |   |   | 186,167 |   |   | 186,167 |   |   | -- |   |
| Executive Council                                                                                                                                                |   |   |   | 8,716 |   |   | 8,716 |   |   | -- |   |
| Finance                                                                                                                                                          |   |   |   | 44,256 |   |   | 44,256 |   |   | -- |   |
| - Public Service Pensions and Benefits                                                                                                                           |   |   |   | 254,278 |   |   | 254,278 |   |   | -- |   |
| First Nations and Métis Relations                                                                                                                         |   |   |   | 70,336 |   |   | 83,363 |   |   | 13,027 |   |
| Government Services                                                                                                                                              |   |   |   | 13,450 |   |   | 13,450 |   |   | -- |   |
| Health                                                                                                                                                           |   |   |   | 3,745,333 |   |   | 3,815,333 |   |   | 70,000 |   |
| Highways and Infrastructure                                                                                                                                      |   |   |   | 372,090 |   |   | 372,090 |   |   | -- |   |
| Information Technology Office                                                                                                                                    |   |   |   | 5,401 |   |   | 5,401 |   |   | -- |   |
| Intergovernmental Affairs                                                                                                                                        |   |   |   | 3,538 |   |   | 3,538 |   |   | -- |   |
| Justice and Attorney General                                                                                                                                     |   |   |   | 129,542 |   |   | 129,542 |   |   | -- |   |
| Municipal Affairs *                                                                                                                                              |   |   |   | 251,220 |   |   | 251,220 |   |   | -- |   |
| Office of the Provincial Secretary                                                                                                                               |   |   |   | 4,153 |   |   | 4,153 |   |   | -- |   |
| Public Service Commission                                                                                                                                        |   |   |   | 36,621 |   |   | 36,621 |   |   | -- |   |
| Saskatchewan Research Council                                                                                                                                    |   |   |   | 12,082 |   |   | 12,082 |   |   | -- |   |
| Social Services                                                                                                                                                  |   |   |   | 631,446 |   |   | 631,446 |   |   | -- |   |
| Tourism, Parks, Culture and Sport                                                                                                                                |   |   |   | 136,858 |   |   | 136,858 |   |   | -- |   |
| CIC Transfer for Carbon Capture Trust                                                                                                                            |   |   |   | -- |   |   | 240,000 |   |   | 240,000 |   |
| **Legislative Branch of Government**                                                                                                                             |   |   |  |  |  |  |  |  |  |  |  |
| Chief Electoral Officer                                                                                                                                          |   |   |   | 1,071 |   |   | 1,295 |   |   | 224 |   |
| Children's Advocate                                                                                                                                              |   |   |   | 1,531 |   |   | 1,531 |   |   | -- |   |
| Conflict of Interest Commissioner                                                                                                                                |   |   |   | 151 |   |   | 151 |   |   | -- |   |
| Information and Privacy Commissioner                                                                                                                             |   |   |   | 822 |   |   | 822 |   |   | -- |   |
| Legislative Assembly                                                                                                                                             |   |   |   | 22,931 |   |   | 23,174 |   |   | 243 |   |
| Ombudsman                                                                                                                                                        |   |   |   | 2,068 |   |   | 2,075 |   |   | 7 |   |
| Provincial Auditor                                                                                                                                               |   |   |   | 7,126 |   |   | 7,126 |   |   | -- |   |
|                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Operating Expense ***                                                                                                                                          |   |   | **$** | **8,581,880** |   | **$** | **8,934,252** |   | **$** | **352,372** |   |
| Debt Servicing                                                                                                                                                   |   |   |   | 535,000 |   |   | 510,000 |   |   | (25,000 | ) |
| **Expense ***                                                                                                                                                    |   |   | **$** | **9,116,880** |   | **$** | **9,444,252** |   | **$** | **327,372** |   |
| *    Budget Estimate includes $10.4M provided to the Ministry of Municipal Affairs by Further Estimates.                                          |

----

1st Quarter Financial Report/GRF Update   7

----

----

| 2008-09 1st Quarter Financial Report                    Province of Saskatchewan                    General Revenue Fund                    Statement of Debt                    As at March 31 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
||
||
| **Crown Corporation Public Debt**                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Information Services Corporation of Saskatchewan                                                                                                                                                |   |   | $ | 13,547 |   | $ | 13,547 |   | $ | -- |   |
| Investment Saskatchewan Inc.                                                                                                                                                                    |   |   |   | 3,919 |   |   | -- |   |   | (3,919 | ) |
| Municipal Financing Corporation of Saskatchewan                                                                                                                                                 |   |   |   | 25,764 |   |   | 62,976 |   |   | 37,212 |   |
| Saskatchewan Crop Insurance Corporation                                                                                                                                                         |   |   |   | 72,158 |   |   | 19,392 |   |   | (52,766 | ) |
| Saskatchewan Housing Corporation                                                                                                                                                                |   |   |   | 34,075 |   |   | 33,001 |   |   | (1,074 | ) |
| Saskatchewan Opportunities Corporation                                                                                                                                                          |   |   |   | 31,844 |   |   | 54,128 |   |   | 22,284 |   |
| Saskatchewan Power Corporation                                                                                                                                                                  |   |   |   | 2,173,311 |   |   | 2,521,383 |   |   | 348,072 |   |
| Saskatchewan Telecommunications Holding Corporation                                                                                                                                             |   |   |   | 289,698 |   |   | 359,755 |   |   | 70,057 |   |
| Saskatchewan Water Corporation                                                                                                                                                                  |   |   |   | 40,118 |   |   | 50,318 |   |   | 10,200 |   |
| SaskEnergy Incorporated                                                                                                                                                                         |   |   |   | 709,894 |   |   | 772,652 |   |   | 62,758 |   |
| Crown Corporation Public Debt                                                                                                                                                                   |   |   | $ | 3,394,328 |   | $ | 3,887,152 |   | $ | 492,824 |   |
| **Government Public Debt**                                                                                                                                                                      |   |   |   | 6,824,323 |   |   | 4,652,384 |   |   | (2,171,939 | ) |
| **Public Debt**                                                                                                                                                                                 |   |   | **$** | **10,218,651** |   | **$** | **8,539,536** |   | **$** | **(1,679,115** | **)** |
| **Guaranteed Debt**                                                                                                                                                                             |   |   |   | 25,227 |   |   | 46,139 |   |   | 20,912 |   |
| **Total Debt**                                                                                                                                                                                  |   |   | **$** | **10,243,878** |   | **$** | **8,585,675** |   | **$** | **(1,658,203** | **)** |
| Crown Corporation Gross Debt                                                                                                                                                                    |   |   | $ | 3,759,538 |   | $ | 4,269,781 |   | $ | 510,243 |   |
| Crown Corporation Sinking Funds                                                                                                                                                                 |   |   |   | (365,210 | ) |   | (382,629 | ) |   | (17,419 | ) |
|                                                                                                                                                                                            |   |   | $ | 3,394,328 |   | $ | 3,887,152 |   | $ | 492,824 |   |
| Crown Corporation Guaranteed Debt                                                                                                                                                               |   |   |   | 862 |   |   | 821 |   |   | (41 | ) |
| **Crown Corporation Total Debt**                                                                                                                                                                |   |   | **$** | **3,395,190** |   | **$** | **3,887,973** |   | **$** | **492,783** |   |
| Government Gross Debt                                                                                                                                                                           |   |   | $ | 7,818,371 |   | $ | 7,368,239 |   | $ | (450,132 | ) |
| Government Sinking Funds                                                                                                                                                                        |   |   |   | (994,048 | ) |   | (2,715,855 | ) |   | (1,721,807 | ) |
|                                                                                                                                                                                            |   |   | $ | 6,824,323 |   | $ | 4,652,384 |   | $ | (2,171,939 | ) |
| Government Guaranteed Debt                                                                                                                                                                      |   |   |   | 24,365 |   |   | 45,318 |   |   | 20,953 |   |
| **Government Total Debt**                                                                                                                                                                       |   |   | **$** | **6,848,688** |   | **$** | **4,697,702** |   | **$** | **(2,150,986** | **)** |
| **Total Debt**                                                                                                                                                                                  |   |   | **$** | **10,243,878** |   | **$** | **8,585,675** |   | **$** | **(1,658,203** | **)** |

----

8   1st Quarter Financial Report/GRF Update

----

----

**1st Quarter Financial Report**        Appendix — Updates to the Non-Renewable Resource Forecast

**POTASH**

The potash revenue forecast has increased from $352.6 million to $1.36 billion, an increase of $1.0 billion since the 2008-09 Budget.

The 2008-09 Budget forecast for potash revenue was based on a price assumption of $331.60 per K2O tonne in 2008, a 17 per cent increase over 2007 levels. A further four per cent increase in average prices was anticipated in 2009.

However, tight supply conditions and strong global demand for potash have allowed potash producers to dramatically increase prices much more than previously forecast. Strong demand for potash, used in fertilizer, is related to high crop prices.

There are many factors behind the recent increase in global crop prices, including population growth, rising input costs and adverse weather conditions in the past few years in some major grain and oilseed producing areas.

The US Department of Agriculture estimates that global grain and oilseed consumption exceeded production in seven of the past eight years. As a result, current levels of global grain inventories are very low and the world began to experience significant food inflation in 2008.

And while the US economy is mired in a slowdown, world economic growth continues, especially in the developing world. This has resulted in millions more people around the world consuming more nutritious diets, including meat. Increasing amounts of feed grains are required for animal feedstock to increase global meat production.

In addition, soaring oil prices and the desire to find alternatives to petroleum have quickened the pace of biofuels production, leading to higher demand for grains and oilseeds as inputs.

These market fundamentals are pushing prices for wheat, corn, oilseeds and other crops to record or near-record levels, providing farmers with the incentive to use increasing amounts of fertilizer in an attempt to increase planted acreage and achieve higher yields. Fertilizer, of which potash is a key ingredient, is in high demand.

Against this backdrop, global demand for potash has increased substantially in 2008 without a corresponding increase in supply. There is little excess inventory available throughout the world, nor is there the ability to significantly increase potash production in a short-time frame.

As a result, Saskatchewan potash producers were able to negotiate a US$400 price per KCl tonne increase with China in April. Customers in India

----

1st Quarter Financial Report/GRF Update   9

----

----

Since the spring, Saskatchewan and other global producers have announced further price increases. Most recently, Saskatchewan sales into the Asian market for delivery in the fourth quarter of 2008 were negotiated at approximately US$1,000 per tonne. All new sales are expected to be at these higher levels.