Alberta will end fiscal 2025/26 with a deficit and will run a deficit for the next three fiscal years as well, the province’s finance minister has said.
The deficit for fiscal 2025/26 is calculated at C$4.1 billion ($3 billion), set to swell to C$9.4 billion ($6.9 billion) next fiscal year and then moderate to C$7.6 billion ($5.56 billion) in fiscal 2027/28 and further to C$6.9 billion ($5.05 billion) for fiscal 2028/29, minister Nate Horner said, as quoted by CTV News.
“There are three levers here for government and for Alberta: its revenue, its expenses, and its deficits. I’m sure it’ll bring forward a lot of conversations about where we go from here,” the finance minister said.
The deficit is related to lower income from Alberta’s oil industry, while the provincial government plans to increase spending in key areas such as healthcare and education, as well as infrastructure. However, four years of deficit go counter to a provincial rule adopted three years ago that places limits on the number of years that the government can budget a deficit to three, barring extraordinary circumstances, such as revenues falling by more than C$1 billion.
“Technically, we’re not breaking the rule until the third consecutive deficit actually shows up in that year’s annual report, but it shows the work isn’t done,” Horner told media, noting that oil prices have been trending lower for a while, harming Alberta’s oil-sensitive bottom line. According to the finance minister, every price decline of C$1 per barrel translates in a revenue decline of C$680 million.
The government, however, expects prices to bottom out this year and start climbing from next year onwards. This, if it happens, should help Alberta tackle issues arising from its population growth. For this year, the provincial government has budgeted an average West Texas Intermediate price of $60.50 per barrel. WTI is currently trading above $65 per barrel.
By Irina Slav for Oilprice.com
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