Alberta premier says budget surplus forecasts will be reduced

Fri Nov 28, 2014 5:40pm EST
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By Scott Haggett and Nia Williams

CALGARY, Alberta (Reuters) - At current crude prices, Alberta will have a "tight, balanced budget" for the 2014/15 fiscal year, Premier Jim Prentice said on Friday as he scaled back oil price forecasts and signaled cuts in government spending for Canada's richest province.

After addressing a Calgary business audience, Prentice told reporters that a forecast of Alberta having a 2014/15 budget surplus of C$933 million, made earlier this week, is already likely too high.

"That will be undoubtedly be reduced," he said. "We're getting close to numbers that represent a tight, balanced budget."

The steep slide in oil prices following producer group OPEC's decision not to reduce production will cut into Alberta's finances.

The province, the single largest oil exporter to the United States, relies on fees and royalties from its natural resources sector for nearly a third of its budget. For each $1 drop in the average price of oil over the year, the province loses C$215 million, Prentice said.

The province expects an oil price between US$65-75 per barrel for the second half of the current fiscal year, down from the previous forecast of an average price of $75 through the end of the fiscal year.

Prentice said while he expects to restrain government spending, he will not impose a sales tax and will keep the tax regime the lowest in Canada.

His comments come as Alberta's energy industry and investors look to cope with a nearly 40 percent slide in benchmark oil prices since June.   Continued...

Alberta Premier Jim Prentice addresses supporters after he was elected in the Calgary Foothills riding in Calgary, Alberta, October 27, 2014.  REUTERS/Todd Korol