Alberta’s Finance Minister says it’s possible he could put forward a balanced budget as early as next year, which would mark a dramatic turnaround in a province that has struggled for years with a persistent oil downturn and deep deficits.
“In order to balance in the upcoming year, it’s going to take reasonably high energy prices to get that done. We’re going to use a realistic but appropriately cautious approach to those assumptions.”Alberta suffered from the dual shock of the COVID-19 pandemic and a crash in oil prices in the spring of last year, which only added to the misery of a downturn in the resource sector that began when prices collapsed in 2014.
Mr. Toews released a quarterly fiscal update last week that showed an economic windfall, in large part due to oil and gas royalties that are now projected to be the highest in a decade. Those increased royalty revenues, along with a faster-than-expected rebound for corporate and personal income taxes, allowed the Finance Minister to revise the deficit projection for 2021-22 to $5.8-billion, down from $18.2-billion in his February budget.
Mr. Toews acknowledged that the unpredictability of oil and gas royalties, which are expected to account for nearly 20 per cent of the Alberta’s revenues this year, is a risk to the relatively rosy picture that has emerged recently. He said the province’s focus on diversifying in areas such as tech and petrochemicals will help make things more stable.
He also repeated his promise that the government, which has focused on constraining spending to tackle budget deficits, will soon appoint a panel to examine Alberta’s revenues. He said the details are still being worked out, but he expects that will happen before the 2023 provincial election.