UPDATE 2-Alberta warns its oil woes may worsen deficit

Tue Feb 19, 2013 6:03pm EST
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* 2012-13 deficit forecast at C$3.5 bln-C$4 bln

* Managers face salary freeze

* C$600 mln in savings identified

By Jeffrey Jones

CALGARY, Alberta, Feb 19 (Reuters) - Alberta's current-year deficit may balloon to as much as C$4 billion ($4 billion), more than four times the initial forecast, due to a deep discount on the Western Canadian province's oil and the strong Canadian dollar, the government said on Tuesday.

In its third-quarter update, the Conservative government of Premier Alison Redford said the 2012-13 deficit could be C$3.5 billion to C$4 billion, compared with an initial budget projection of C$886 million. The forecast has increased throughout this year.

Resource revenue was C$2.4 billion less than expected over the first nine months of this year, it said.

Redford has already warned that the next budget, due March 7, will be a tough one due to an expected C$6 billion shortfall in energy revenues because Alberta's oil sands-derived crude sells for much less than U.S. benchmark oil.

The government in the province of 3.8 million people derives nearly a third of its revenue from the energy sector in the form of royalties and land sales.   Continued...