WINNIPEG, Manitoba (Reuters) - The Canadian province of Alberta, blindsided by a revenue crash due to pandemic lockdowns and lower oil prices, tripled its deficit estimate for the current fiscal year on Thursday to C$24.2 billion ($18.41 billion), from C$7.3 billion previously.
Right-leaning Premier Jason Kenney had warned this week of a record-high deficit.
The province is usually one of Canada’s wealthiest, but its reliance on energy revenues left it vulnerable when the COVID-19 pandemic triggered a drastic global reduction in air and road travel.
“These numbers are incredibly sobering to all of us,” said Finance Minister Travis Toews. “We are facing the most significant economic challenge of our generation.”
The province expects its real gross domestic product to plunge 8.8% in 2020 before growing 4.6% in 2021.
Toews said plans to balance Alberta’s budget are delayed, and he intends to give a three-year fiscal update in November.
Neighboring Saskatchewan, which also produces oil, shaved its deficit estimate to C$2.1 billion.
Missing from Alberta’s update were steps to tame the deficit, said Trevor Tombe, associate professor of economics at University of Calgary.
“There is a large challenge that awaits and it’s going to almost surely require changes in taxes or other increases in revenue.”
Alberta finished the last fiscal year with a C$12.2 billion deficit. Debt looks to reach C$99.6 billion by next March.
Revenue for the current 2020-21 year is estimated at C$38.4 billion, down from the previous estimate of C$50 billion.
The drop factored in a 13% cut in oil production, which may slash government oil and gas royalties by C$3.7 billion. Alberta forecast U.S. oil prices to average $35.60 per barrel in 2020-21, down from $58.
Kenney’s United Conservative Party government boosted spending to C$62.6 billion from C$57.3 billion.
Alberta announced in June it would accelerate a corporate tax cut and spend C$10 billion on infrastructure to jump-start its economy.
Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Chris Reese and Tom Brown
Our Standards: The Thomson Reuters Trust Principles.