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Alberta’s deficit is expected to shrink over the coming years, thanks in part to a slow rebound in oil royalties and corporate tax revenues.

But the deficit is expected to remain around $6.8 billion by 2019-2020. And, in that time, net debt will balloon and debt charges will double, according to The Conference Board of Canada’s Alberta Fiscal Snapshot.

While “the turnaround in revenue growth is good news for Alberta,” the province “will have difficulty balancing its books in a timely fashion due to its dependence on volatile resources royalties to fund their operating expenditures and some of the highest per capita spending in the country,” says Marie-Christine Bernard, associate director, provincial forecast.

She adds, “The end of the commodity super-cycle means the province must address both revenues and spending to bring its finances back to balance.”

Report highlights

  • Alberta’s economy will be a growth leader this year—but a return to the rapid growth of before the oil collapse is not expected. Read: Lower growth for 5 provinces: DBRS
  • Budget 2017 introduced a plan to keep spending increases well below the rate of population growth and inflation. Outside of health care and education, the provincial government plans to keep program spending basically flat at 0.14% average annual growth over the next three years.
  • Large deficits and rising debt levels will be the norm over the forecast. The growing debt burden will increasingly become a concern to Albertans and credit agencies.
  • After falling by 13% from its 2014-15 level in 2016-17, Alberta’s government revenues are expected to grow by an average of 6.1% over the next three fiscal years, with nearly two-thirds of revenue growth coming from increased royalties, revenues from the provincial carbon tax, and higher corporate taxes.

Read the full report.

Also read:

Hits and misses in the energy sector

Is Canada’s economy set to surge? Here are banks’ forecasts

Originally published on Advisor.ca
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