TORONTO (Reuters) - The Canadian crude-producing province of Alberta said on Wednesday it finished the 2015-16 fiscal year with a C$6.4 billion ($4.93 billion) deficit, C$324 million wider than forecast in October, as revenue fell.
Total revenue was C$1.3 billion lower than targeted at C$42.5 billion, the province’s annual budget report showed. Revenue fell C$7 billion from 2014-15, mostly due to a drop in non-renewable resource revenue to C$2.8 billion.
The province said that the economy contracted an estimated 3.7 percent in 2015 as depressed oil prices hit hard.
U.S. crude oil prices plunged from above $100 a barrel in mid-2014 to a 12-year low of $26.05 in January. Oil has since made a partial recovery, trading at nearly $50 on Wednesday.
In April, the province said it will post a C$10.4 billion budget deficit in 2016-17 and warned that a surplus might not return until 2024 as the oil price slump batters its economy.
A massive wildfire has since triggered production cuts in Alberta’s oil sands region, heaping more pressure on the province’s economy and weighing on the growth outlook for the country as a whole.
The Bank of Canada has signaled that country’s economy will shrink in the second quarter as a result of damage from the wildfires.
Still, portfolio managers expect the province to have the financial strength to overcome the crisis, noting its low stock of debt and ability to introduce a sales tax if oil prices don’t recover.
The yield on Alberta’s 30-year bond traded at 16 basis points above Ontario on Wednesday, little changed on the day. The spread has narrowed from a peak of 20.5 basis points in May when the wildfires spooked investors.
($1 = 1.2974 Canadian dollars)
Reporting by Fergal Smith; Editing by Alan Crosby