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Prince Edward Island Liberal Leader Robert Ghiz greets supporters in Charlottetown on Oct. 3, 2011, after his party won a majority in the provincial election.

Andrew Vaughan

The Liberals came back to power with a trimmed majority in Prince Edward Island Monday, leaving incumbent premier Robert Ghiz facing a resurgent opposition as the province goes into what he called "unknown" economic waters.

The Liberals dropped a pair of districts to win 22 of the legislature's 27 seats. It was a clear victory but considerably less than the sweep predicted earlier in the campaign. The Progressive Conservatives boosted their seat count from two to five, almost certainly protecting the job of embattled Leader Olive Crane.

At dissolution the Liberals had 24 seats, the Tories two and there was one vacancy.

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"We're extremely happy that Islanders have given us a chance to govern over the next four years," said Mr. Ghiz, who easily won his riding of Charlottetown-Brighton, a largely residential district.

Mr. Ghiz's victory builds upon a family dynasty in Island politics that began with his father Joe, who served two terms as the province's premier from 1986 to 1993.

"I'm sure he's looking down tonight and is extremely proud," Mr. Ghiz said.

Ms. Crane won her rural district of Morell-Mermaid in eastern PEI.

"Today is about Islanders and they've made their decision," Ms. Crane told CBC. "Of course, we would have liked to have done a little better, but looking back we would not have changed a bit of our strategy."

The 37-year-old Mr. Ghiz ran a circumspect campaign, saying that the fiscal situation did not allow for major promises.

Shortly after addressing supporters at his campaign office, Mr. Ghiz ruled out spending cuts and said they would monitor the economic situation on a year-by-year basis.

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"We're moving into really unknown territory in terms of where we are [economically]" he said. "As long as there's growth, and it looks like there is going to continue to be growth, we'll be in good shape."

The have-not province is in a difficult place, relying heavily on transfers from Ottawa in an era when the federal government is moving increasingly toward austerity.

Few observers believe that the province will be able to balance its books in this mandate without cutting government spending as well. But Mr. Ghiz will need to move carefully, cognizant of Islanders' long memories and aware that the Tories garnered far more support than their seat-total would suggest.

"This is still a very tight two-party system," said Peter McKenna, chair of political science at the University of Prince Edward Island. "At some point down the road people will be looking for an alternative and they won't be looking at the Greens, they won't be looking at the NDP. The party has to rebuild and they'll come back."

Voters shrugged off persistent allegations of corruption and cronyism within government, stemming from an immigration-program scandal that emerged early in the campaign.

By percentage of vote, the Liberals scored about 51 per cent support and the Tories about 40 per cent. The NDP and the Greens, neither of which ran full slates, scored under 5 per cent each and did not win seats.

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With a report from The Canadian Press

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