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CALGARY, Alberta (Reuters) - The Canadian province of Alberta, home to much of the country's oil production, forecast on Monday that its budget deficit for the current year will be lower than first expected due to strong sales of oil exploration lands but higher than its first-quarter estimate.
In its second-quarter update on the budget, the province forecast it will post a $3.1 billion deficit for the 2011-12 fiscal year, down $341 million from the estimate in its budget documents, but well above the $1.3 billion deficit it projected in its first-quarter update.
The forecast is the first made under new Premier Alison Redford, who took over leadership of the governing Progressive Conservative Party in October and pledged higher education spending.
It was also the first budget update delivered by Finance Minister Ron Liepert, who was shifted from the energy portfolio when Redford shuffled her cabinet.
The government said revenues for the year are now estimated to be $38.3 billion. That's $2.7 billion higher than its budget outlook, but $2.3 billion lower than its first-quarter projection as the European debt crisis has roiled markets and cut oil prices.
"By the time the first quarter had been tabulated, oil prices had dropped and the market had significantly dropped," Liepert told reporters. "The criticism at that time was the first quarter (outlook) was too optimistic."
Alberta relies on royalties from oil and gas production and revenue from land leases for nearly a quarter of its revenue. The province said it expects its revenue from nonrenewable resources to be $10.14 billion, 22 percent higher that its budget estimate of $8.32 billion, mostly due to strong land sales.
Reporting by Scott Haggett; editing by Peter Galloway