Canada’s main oil-producing province of Alberta on Thursday said the budget surplus would shrink in the 2024/25 fiscal year due to adverse market conditions before growing again as the economy strengthened.
In an annual budget document, the finance ministry said the 2024/25 surplus would be just C$0.4 billion, down from C$5.2 billion in 2023/24. The 2025/26 surplus is seen at C$1.4 billion, rising to C$2.6 billion in 2026/27.
Total revenue in 2024/25 is estimated at C$73.5 billion, down 2.8% from the previous forecast.
“Revenue continues to be volatile as a significant portion is highly sensitive to global economic conditions including commodity prices, interest and exchange rates, and financial markets,” the budget document said, describing the medium-term economic prospects as optimistic.
The budget forecast real GDP growth of 2.9% in 2024, up from 2.5% last year, rising to 3.3% in 2025 and 2.8% in 2026.
Alberta is home to the oil sands, the world’s third-biggest crude reserves, which means its economy is closely tied to oil prices. Resource revenue is seen at C$17.3 billion in 2024/25, down from the C$19.4 billion forecast in the last budget.
The West Texas Intermediate oil price for 2024/25 is estimated to average $74 U.S. per barrel, down from the $76.50 in 2023/24.
The document said additional pipeline capacity was poised to expand market access and bolster oil prices and cited optimism among oil and gas producers despite what it called political and regulatory uncertainties from Ottawa.
The government plans to cut personal taxes by introducing a new 8% bracket on the first C$60,000 of income. The current lowest bracket is 10% on the first C$142,292 of income.
Alberta created a sovereign wealth Heritage Fund in the 1970s to collect a portion of resource revenues but successive governments raided it during tough times, meaning it currently has around C$25 billion.
By year-end, Alberta will release a long-term plan on how to grow the fund to between C$250 billion and C$400 billion by 2050 and help replace reliance on resource revenues.
(Reporting by David Ljunggren, editing by Promit Mukherjee)