Alberta is expecting its first budget surplus since 2014/15, Finance Minister Travis Toews said on Thursday, as soaring global energy prices and increased oil output boost provincial resource revenue.
Alberta expects a surplus of C$500 million ($391 million) in the fiscal year beginning April 1, compared with C$3.2 billion deficit expected in the current financial year. The 2021/22 deficit forecast was significantly revised down from an original projection of C$18.2 billion made in February 2021.
Reuters reported last week that Alberta was on course to return to budget surplus in the coming fiscal year.
The province is also forecasting surpluses of C$900 million and C$700 million in 2023/24 and 2024/25, respectively.
The dramatic turnaround in Alberta’s financial fortunes could provide a boost to Premier Jason Kenney, who faces a leadership review held by his United Conservative Party in April, and has been criticised by many Albertans for his handling of the COVID-19 pandemic.
The Alberta government based its 2022/23 budget assumptions on an average U.S. crude oil price of $70 a barrel, well below the current price of $96 a barrel. Oil prices topped $100 per barrel on Thursday after Russia invaded Ukraine, fanning concerns about disruptions to global energy supplies.
“In 2022 Alberta’s economy will fully recover from the contraction that first started in 2014 and we will lead the nation in economic growth,” Toews said.
The oil and gas sector makes up around 17% of Alberta’s gross domestic product (GDP), and the provincial economy has struggled since the 2014 global crude price slump forced the industry to slash capital spending and lay off thousands of workers.
Toews said Alberta is working on diversifying its economy to become less reliant on volatile commodity prices.
“Oil prices will go up and down, but we’re looking to create more stability, more sustainability in Alberta’s income statement,” he added.
Alberta expects to bring in C$13.8 billion in resource revenue in 2022/23, up from C$13.2 billion in 2021/22. Alberta’s original resource revenue forecast for 2021/22, made early last year when oil prices were still recovering from a pandemic-induced crash, was C$2.9 billion.
Alberta expects economic growth of 5.4% in 2022, down slightly from 5.8% in 2021.