By Alex McCuaig

Deficit for 2020-21 forecast at $24B

Alberta’s debt nearly $100 billion

Aug 27, 2020 | 10:37 AM

MEDICINE HAT, AB – Albertans were warned to expect a huge hole being punched in the province’s finances earlier this week caused by the double-whammy of an oil war between Saudi Arabia and Russia combined with a global pandemic.

And Thursday morning saw Alberta’s finance minister deliver the sobering details of the damage.

The province is nearly $100-billion in debt, unemployment isn’t expected to rebound until after next year and the economy is expected to contract by nine per cent, Toews told the Alberta’s legislature.

The current deficit for the 2020-2021 fiscal year alone is forecast at more than $24 billion.

Revenues are forecast to fall by more than $11 billion from budgeted and expenses rise by $5.3 billion.

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Resource revenue to the province is being hit the hardest, dropping from a projected $5.2 billion for this fiscal year to $1.2 billion.

The provincial budget passed in March – just as the province was being locked down due to the pandemic and the oil price war was raging – estimated the price of a barrel of crude at $57, a projection which is now down to less than $36.

More than $3 billion in bitumen royalties forecast in the spring have been reduced to $686 million.

The province will is also projecting it will collect less tax from Albertans – nearly $2 billion less from personal taxes and a little more than $2 billion from corporate taxes.

Federal transfers are the one bright spot on the revenue side, increasing to $10 billion for the fiscal year, $846 million more than anticipated.

The province is expected to provide a three-year fiscal update in November followed by a budget in February 2021.

Next door, the Saskatchewan government is projecting a slightly lower deficit than initially feared in its June budget and an economic bounce back to pre-pandemic levels in 2022.

The ministry of finance’s first-quarter update predicts $2.1 billion in red ink, down from the $2.4 billion predicted earlier this summer.

The province expects to run deficits for the next three years before squeezing out a $125-million surplus in 2024-25.

— with files from The Canadian Press