Low oil puts Alberta on track for record $10.4B deficit in 2016-17
The Canadian Press
Published Wednesday, February 24, 2016 8:41AM EST
Last Updated Wednesday, February 24, 2016 4:55PM EST
EDMONTON -- Alberta Finance Minister Joe Ceci says the prolonged cratering of world oil prices is expected to saddle his province with a record $10.4-billion deficit in the next budget.
"Our deficit could be as high as $5 billion more in the next fiscal year than what we expected in our October budget. That is simply the reality of our circumstances," Ceci said at a news conference Wednesday at the legislature.
In the last budget, the province projected a $5.4-billion deficit for the 2016-17 fiscal year, and Ceci said the new $5 billion figure would be on top of that.
"This is the steepest and most prolonged slide in oil prices in recent history, dropping more than 70 per cent in the last year and half," Ceci said.
"Projections for a quick recovery have proven wrong. This is a once-in-a-generation challenge."
Oil and gas have long been the mainspring of Alberta's economy, delivering multibillion deficits earlier this decade.
But the benchmark price for oil has fallen from a high of more than $US100 a barrel in June 2014 to around US$30 today.
Every $1 drop in the average price of oil over the course of a year drains $170 million from Alberta's coffers.
Ceci also said the province is no longer promising to balance the books by 2020 and added he can't set a new target date for when that might happen.
He emphasized the province will stick to its plans to avoid cuts in front-line jobs and critical services, to find savings where possible and to take on debt to create jobs in the construction of roads, schools and hospitals.
"We won't respond with knee-jerk cuts to make a bad situation even worse."
Ceci said the 2016-17 budget is to be introduced in early April, but he wouldn't give a date.
His department's third-quarter update for 2015-16 shows the government now expects to run a $6.3-billion deficit this fiscal year -- almost $200 million more than it forecast in the fall.