UPDATE 1-Alberta to borrow C$4.3 bln in "bitumen bubble" budget

Thu Mar 7, 2013 5:40pm EST
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By Jeffrey Jones

CALGARY, Alberta, March 7 (Reuters) - Deeply discounted prices for Alberta heavy crude oil have forced the Western Canadian province into a sixth straight deficit and prompted the once miserly government to borrow more than C$4 billion ($3.9 billion) to help fund badly needed roads, schools and hospitals, its finance minister said on Thursday.

Reliance on debt markets for infrastructure needs marks a radical shift for an energy-rich province that had shunned large-scale borrowing for two decades, and shows how Alberta's inability to move its oil sands-derived bitumen crude to more lucrative export markets has emptied once-bulging coffers.

Alberta, under Progressive Conservative Premier Alison Redford, finds itself in tricky financial straits as it leads the country in economic growth and employment. The province is the largest energy supplier to the United States.

"It's no overstatement to say that we find ourselves in a unique point in time. At a time when we are enjoying a relatively strong economy, we're also experiencing some of the biggest fiscal challenges we've seen in awhile," Finance Minister Doug Horner said.

The government, which has been warning for months of a multibillion-dollar drop in revenues due to what it has termed the "bitumen bubble," said it will have an overall 2013-14 budget shortfall of C$1.97 billion.

That compares with a previous fiscal year deficit of C$3.9 billion, though the government has radically changed the presentation of its accounting to separate funds used for operating from those used for capital spending.

From a solely operating standpoint, the deficit is C$451 million, compared with year-earlier C$1.4 billion, Horner said. The total "cash requirement" is C$6.3 billion, he said.   Continued...