By Chris Brown

Finance minister credits energy prices

Alberta’s projected budget deficit down by more than half to $7.8B

Aug 31, 2021 | 12:20 PM

The provincial government says its economic recovery plan is working and even surpassing expectations.

Finance Minister Travis Toews provided a first-quarter fiscal update this morning.

He said the deficit for the 2021-22 fiscal year is now forecast to be $7.8 billion, $10.5 billion lower than forecast in the February budget.

Revenue is forecast at $55 billion, up $11.3 billion from the budget.

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“Alberta’s economy is on the rebound,” Toews said.

Toews said in February the government expected the economy to grow by 4.8 per cent; as measured by real GDP, the economy is now forecast to grow by 6.7 per cent in 2021, he said.

The improved economic numbers are a result of stronger-than expected average oil prices – $65.50 per barrel for West Texas Intermediate and $52 per barrel for Western Canadian Select and recoveries in business output in manufacturing shipments and international goods exports.

Resource revenues are expected to be $9.8 billion, an increase of $6.9 billion.

There have also been increases in food manufacturing products and chemistry and forestry products, the finance minister said.

Toews said the undeniably good news on the economy doesn’t change the province’s need to get spending under control. Total expenses are up $800 million due to additional drought relief funding and federal infrastructure funding flowing through to municipalities.

“The pandemic and other economic factors have shown us that things can change rapidly despite the encouraging improvement in energy prices. Alberta cannot simply rely on resource revenue to get us back into the black,” he said.

The government is committed to three fiscal anchors on decision-making, Toews said – keeping net debt below 30 per cent of GDP, aligning per capita spending with comparator provinces and setting a time frame for balancing the budget once the government has a clear picture of the long-term global impacts of the pandemic.

Toews said the revised forecast and update takes into account the rising fourth wave of COVID-19 fuelled by the highly-contagious Delta variant.

He called the revenue projections today “cautious and prudent.”

“Our economic forecast includes the uncertainty of a continuing pandemic within our border,” he said. “We’re not expecting to fully recover until 2022. And so we know that the next days, weeks and even months will be bumpy from an economic standpoint.”