Alberta's deficit lower than anticipated last quarter, still reaches $16.9B
The Alberta government's final fiscal update for the 2020-21 year is slightly smaller than anticipated in its update presented in November, but the province is still dealing with a $16.9 billion deficit – more than double what was presented in Budget 2020 last February.
“Last year was very difficult for many Albertans, but the province is emerging stronger than expected," said Travis Toews, Alberta's finance minister.
The $16.9 billion deficit is about $3.2 billion lower than forecast three months ago, boosted by higher-than-expected natural resource revenue and lower spending.
The COVID-19 pandemic and global economic downturn hit Alberta's finances hard, slashing revenue and increasing the need for higher spending on health and other recovery programs.
Alberta spent about $5.5 billion on operating expenses, inventory and capital grants and expenses related to COVID-19. The federal government helped offset some of that cost, sending Alberta about $1.8 billion in transfers during the pandemic.
REVENUE DOWN, EXPENSES UP
Despite higher oil prices through the start of 2021, Alberta's revenue fell to $43.1 billion, nearly $7 billion lower than forecast in Budget 2020. Non-renewable energy resource revenue finished the fiscal year $2 billion lower than anticipated in the budget and income and other taxes fell $3.3 billion lower.
Budget 2020 was built on the assumption that the price of West Texas Intermediate (WTI) would average around $58 per barrel, contributing to non-renewable resource revenue of more than $5 billion.
Instead, the price of WTI averaged around $42 per barrel and energy revenue brought in just over $3 billion
"There is continued economic uncertainty around the pandemic... and that is creating commodity uncertainty," Toews said.
Government expenses ballooned to $60.1 billion for the fiscal year, $2.8 billion higher than forecast in the budget. Much of that cost is due to the province's higher costs for COVID-19 testing, lab costs, vaccine distribution and recovery grants and programs.
The province also took losses of $1.3 billion on the cancelled Keystone XL pipeline project and a $500 million operating loss on the Sturgeon Refinery.