Canada’s main crude-producing province Alberta ended the 2016-17 fiscal year with a $10.8 billion budget deficit, the government’s annual report said on Thursday, as weak oil prices hurt the economy for a third consecutive year.
That was C$263 million higher than forecast in the government’s original 2016 budget. It reflects the impact of a huge wildfire in the Wood Buffalo region of the oil sands in May 2016 and payments related to the phase out of coal power in the province.
The budget deficit is expected to be C$10.3 billion in 2017-18.
Alberta is home to Canada’s vast oil sands and the world’s third-largest crude reserves but has been hit hard by the collapse in global crude prices since 2014, with companies slashing billions of dollars in capital spending and laying off tens of thousands of workers.
Alberta Finance Minister Joe Ceci said the economy is showing signs of recovery after hitting a low point in mid-summer 2016.
“The catastrophic tumble in oil prices took a deep toll on Alberta families last year and that was only compounded by the Wood Buffalo wildfire,” Ceci told a news conference in the Alberta legislature in Edmonton on Thursday.
More than 88,000 people fled the Wood Buffalo region as wildfires raged, destroying 1,500 commercial and residential structures in the city of Fort McMurray and forcing oil sands producers to halt output as a precaution.
As 1.5 million barrels per day of oil sands production was suspended at the height of the fires, and at least 40 million barrels in total, equivalent to 110,000 bpd annually, were estimated to have been shut in over a two-month period.
Government revenues for 2016-17 were C$42.4 billion, down C$0.2 billion from the previous year, but up C$1 billion compared to the budget forecast thanks to increases in resources revenues, investment income and federal transfers.
Total expenses came to C$53.2 billion, up C$4.1 billion from 2015-16 fiscal year, and up C$1.9 billion from the original budget forecast.
Alberta’s economy contracted by 3.5 percent in 2016, of which 0.6 percent was attributed to the Wood Buffalo wildfire.
In the annual report the government said positive economic indicators began to appear late in the summer and continue into this year, such as higher manufacturing sales, a surge in oil drilling rig activity and recovering retail sales and non-energy exports.
(Reporting by Nia Williams; editing by Diane Craft)