Newfoundland and Labrador Premier Paul Davis has announced the government is imposing a freeze on discretionary spending and imposing an extra layer of approval on all hiring.

The measures are in response to falling oil prices, and are expected to save the province "millions" in the short-term, he said.

Davis also would not rule out the possibility of tax increases, saying that will be determined during the budget process.

"This volatility has a significant impact to our province and government," Davis told the House of Assembly.

Finance Minister Ross Wiseman also stated Thursday that due to volatility in the oil sector, he wants to wait a couple of weeks before giving an update on the impact of falling prices on the province's economy. Premier Paul Davis, left, and Finance Minister Ross Wiseman commented Thursday on the ongoing volatility in the oil industry, saying low prices could be the norm for the next couple of years. (CBC)

The issue was discussed in the House of Assembly, and follows an announcement by the OPEC cartel that there would not be cuts in oil production.

The Canadian dollar plunged almost a full U.S. cent Thursday following the OPEC announcement. Brent crude prices, the standard the provincial government bases its estimates on, fell below US$73 per barrel.

The provincial government based its budget on oil prices of US$105 per barrel.

The province has estimated that for every dollar the price of oil is below the projected amount, the treasury will lose $25 million.

Wiseman said he expects volatility to continue in the coming days, and will provide an update on the province's fiscal situation once things settle down.

"I expect for the next week to 10 days to see a lot of movement," Wiseman stated. "Until that time, we'll have a better feel for how this is going to settle out and really impact our bottom line until March 31."

The cost-cutting measures announced Thursday impacts all government departments and agencies, and hiring will be based on "critical needs," said the premier.

Davis could not give specifics on the number of job vacancies in the civil service.

The price of oil has been slumping since the early part of the summer, and Liberal MHA Cathy Bennett said the cost-saving measures should have been announced earlier.

She said citizens of the province deserve to know whether the government plans to borrow more money and increase the deficit, or cut programs and services.

Wiseman accused the Liberals of fear-mongering and said the government will take a prudent approach.