Alberta’s economy will shrink for a second year in 2016 as the oil-reliant Canadian province suffers from the lingering effects of a crude-price crash.
The deficit in the fiscal year that begins April 1 may be about C$10.4 billion ($7.6 billion), while the shortfall in the current fiscal year will reach C$6.32 billion, almost C$200 million higher than forecast in October, the finance ministry said Wednesday.
“It’s a lot,” Alberta Finance Minister Joe Ceci said at a press conference in Edmonton. “It’s a hell of a lot of money.”
Ceci said next year’s deficit would be about C$5 billion more than the October forecast, which was C$5.4 billion.
The collapse of oil prices has put a dent in Alberta’s treasury, which relies on fossil fuel royalty revenue to pay for roads, hospitals and schools. With oil currently hovering around $32 a barrel, the government expects the economy to shrink by 1.1 percent in 2016 from a contraction of 1.5 percent last year. The government had previously expected the economy to grow this year.
“This is a once-in-a-generation economic challenge,” Ceci said in a prepared statement. “Difficult times lie ahead for 2016.”
Alberta cut its current-year forecast for West Texas Intermediate to $45 a barrel, less than the $50 it predicted in October. The government’s expected borrowing requirements were unchanged from the previous forecast at C$9.56 billion.
Revenue from non-renewable resources, including natural gas and bitumen, will be C$2.5 billion in 2015-16, almost C$300 million less than the earlier forecast, and down from almost C$9 billion in 2014-2015.
Health care is Alberta’s largest expense, expected to increase to C$18.4 billion from C$17.8 billion in fiscal 2014-2015. Total spending by government will reach C$49.4 billion, about C$460 million less than previously forecast.