Province runs up big deficit
CALGARY The government of Alberta ran up a larger-than-budgeted deficit last year as the provincial economy shrank for the second year in a row in the wake of plunging oil prices and raging forest fires. But Finance Minister Joe Ceci says the outlook is improving.
The province released its year-end financial statement Thursday that showed its deficit for the fiscal year ended March 31 was almost $10.8 billion, in line with recent estimates, but up from initial budget estimates of $10.5 billion, as the province collected $42.4 billion in revenues but spent $53.2 billion.
“While Alberta’s economy returns to growth and jobs continue to come back, we recognize this is not yet felt by all Albertans,” Ceci said in a statement.
Alberta’s real GDP contracted 3.5 per cent last year, following a 3.6 contraction in 2015, the worst two-year contraction the province has suffered.
At the same time, the unemployment rate averaged 8.1 per cent as 37,000 net jobs were lost and as Alberta’s labour force participation rate, a measure of working-age people either employed or looking for work, dipped to 72.5 per cent — its lowest level since 2001.
“Alberta will return to the September 2015 peak of employment in 2018,” Ceci told reporters, adding the province is expected to lead the country in economic growth next year, and expects the deficit to be eliminated by 2023.
Ceci called the oil price collapse “catastrophic” and said the wildfire that burnt much of Fort McMurray and curbed oilsands production compounded an already difficult situation.
As a result, the province collected less in personal and corporate income tax than budgeted though royalties from oil and gas were up sharply from what was expected. The province collected $3 billion in bitumen and other non-renewable resource revenue, compared with a budgeted revenue of $1.3 billion.
A recent tumble in oil prices could further add to the government’s borrowing obligations, as the finance ministry previously forecast West Texas Intermediate benchmark oil prices would average US$55 per barrel over the 2017-18 fiscal year.