CALGARY, Alberta (Reuters) - The western Canadian province of Alberta posted a C$852 million budget deficit for the 2008-09 fiscal year on Tuesday, lower than the C$1.4 billion shortfall it had expected, but it warned its finances still face pressure from low energy prices.
The government of the oil-rich province had posted 14 years of surpluses -- the result of spending cuts and booming oil and natural gas prices -- before the 2008-09 fall into deficit.
“It was a challenging year for the province,” Lloyd Snelgrove, president of Alberta’s treasury board, said on a conference call. “The rapid global recession, stock market losses, affected investments and economies around the world, including Alberta.”
In its annual report for the fiscal year that ended March 31, the provincial government said it was pushed into deficit by a C$3 billion loss on investments held in its Heritage Fund, which holds a portion of Alberta’s past revenue from oil and gas production. The loss pushed the value of the fund down to C$14 billion at the end of the year.
Snelgrove said the provincial government cut costs by C$400 million over the final quarter of the fiscal year and will look for ways to further cut spending this year.
Alberta warned earlier this year that it may not be able to balance its books for four years as it continues to spend heavily on infrastructure to support a rising population.
The government’s April budget forecast a C$4.7 billion deficit for the current fiscal year. [nN07489633]
It plans to update that estimate in August but Snelgrove cautioned that weak natural gas prices, which have fallen more than 70 percent over the past year, pose a challenge for the province, which is heavily dependent on resource revenue.
“In the immediate future and probably for (up to five years) natural gas prices and demand are not going to strengthen significantly,” he said.
Reporting by Scott Haggett; editing by Peter Galloway