CALGARY — The Government of Alberta has released its first-quarter fiscal update and is facing the largest deficit in the province’s history.
A deficit of $24.2 billion is forecast for 2020-2021, nearly $16.8 billion more than originally estimated in Budget 2020. Alberta’s debt is projected to reach $99.6 billion.
“These numbers are incredibly sobering to all of us,” said Finance Minister Travis Toews in a statement. “We are facing the most significant economic challenge of our generation.”
When Toews unveiled Alberta’s budget in February, it projected a $7.7 billion deficit. Budget 2020 was built on the assumption that the price of West Texas Intermediate (WTI) would average $58 USD per barrel. Instead, the price of oil has hovered much lower than that and the government is now forecasting the price of WTI to average $35 USD per barrel for 2020-21.
The province says a severe decline in revenue coupled with increased expenses — primarily in response to the COVID-19 pandemic and supports for Albertans and Alberta businesses during economic uncertainty — dug Alberta into a hole.
The lion’s share of the drop in revenue — $38.4 billion compared to the Budget 2020 estimate of nearly $50 billion — was the result of significant declines in funds generated from income tax, resources and gaming.
Provincial expenses increased to $62.6 billion — $5.3 billion more than outlined in the budget — due in part to $2.5 billion in operating expense spending on COVID-19 and recovery plan initiatives, as well as $632 million in purchases of COVID-19-related personal protective equipment.
This is a developing story. It will be updated throughout the day.