WINNIPEG -- The Manitoba government, projecting a deficit of just under $1.6 billion for 2021-22, is dipping into its rainy-day fund to mitigate the effects of COVID-19 on businesses.

Finance Minister Scott Fielding says the pandemic's fallout will result in a deficit of just over $2 billion for the current fiscal year.

"Right now our priority is to protect Manitobans," Fielding said Tuesday.

Fielding released the projections ahead of next week's provincial budget.

Most of the deficit can be linked to COVID-19 relief programs and Fielding said more information would be provided in the upcoming budget.

"It will ... ensure we can get to the other side (of the pandemic)," he said.

The Tories ran on promises to cut taxes and balance the books over two terms. The government noted a $5-million surplus in the last fiscal year just as the pandemic took hold.

The Progressive Conservative government is withdrawing $215 million from the fund, which will leave the account's balance at $585 million.

The Tories have added hundreds of millions to the fund since 2016.

The government had wavered on whether to use it during the pandemic and said keeping the money where it was would help Manitoba borrow more easily.

Fielding said dipping into the fund now will keep the province from borrowing from the capital market and save taxpayers on interest costs.

The money is to be used to cover the cost of a grant program that provides direct financial support to businesses.

Fielding said the plan is to reduce the deficit over eight years, while replenishing the rainy-day fund.

But he added that there's a good chance the government might have to dip into the emergency fund again.

The province is releasing its 2021 budget next week on April 7.

Mark Wasyliw, the Opposition NDP's finance critic, said the government's decisions during the pandemic have made life harder for many families.

He criticized the Tories for not spending the emergency fund on things like "safer classrooms or stronger health services."

"Manitobans want balance when times are good, but in a crisis they just want a government they can rely on to help them."

This report by The Canadian Press was first published March 30, 2021.