Yesterday’s economic and fiscal update by Alberta’s Finance Minister Travis Toews presented the impact of both the COVID-19 pandemic and the sharp decline in Alberta’s oilpatch revenues on provincial public finances. Around two-thirds of the $24.2 billion deficit is attributed to a shortfall in revenue, with the biggest of those shortfalls coming from oil and gas revenues. Those revenues are expected to only reach $1.2 billion in the fiscal year: about a quarter of what was expected in the budget and the lowest in more than 20 years.
Alberta Central’s Chief Economist Charles St-Arnaud says the update could have included information on the deficit reduction expected in 2021 as a result of economic recovery. “With growth coming next year and the unemployment rate expected to lower next year, should we expect revenues to gain back?” he said in an Interview with CBC’s Kyle Bakx.
The update is nevertheless still an essential starting point for discussion on how to balance the books in the coming years, says St-Arnaud. With the strategy of reducing expenses likely to be insufficient, an important discussion on modernizing the revenue side of the equation will be required in the near future he says.
Read the full CBC article: As oil money dries up, Alberta’s financial woes laid bare.