CALGARY, Alberta (Reuters) - Alberta’s budget shortfall could hit C$3 billion ($3 billion) in the current fiscal year, more than triple the initial estimate, if lower crude prices and weaker-than-expected energy revenues keep pressuring the finances of Canada’s biggest oil-producing province, the government said on Thursday.
In a first-quarter update, Finance Minister Doug Horner said the Conservative government, which has pledged to balance its books next year, intends to cap its operating expenses now and may have to cut deeper if the current energy-market conditions persist.
He pointed out that private-sector oil-price forecasts that the government tracks for budgeting have dropped 5.8 percent from its February financial plan to average $93.62 a barrel for benchmark U.S. crude this year.
Alberta is the largest foreign energy supplier to the United States and oil and gas production and other industry activity account for as much as a third of the government revenues in the Western Canadian province of 3.5 million people.
“We can’t control the world events that impact our revenue but we can take steps to stay on course,” Horner said in a statement.
The deficit could be C$2.3 billion to C$3 billion for the fiscal year starting April 1, up from the initial budget deficit estimate of C$886 million, based on results so far, he said.
Energy revenue decreased C$400 million in the first quarter, due mostly to lower royalties from oil sands and conventional oil production and revenues from government lease sales.
Horner said he still intends to deliver a balanced budget in 2013-14, pointing out that other economic indicators are positive including a projected 3.8 percent increase in gross domestic product this year and forecasts from private agencies that Alberta will lead Canadian provinces in economic growth.
Reporting by Jeffrey Jones; Editing by Jeffrey Hodgson and Phil Berlowitz