Alberta reports $10.4b deficit as the province is set to contract 1.4% in 2016
Alberta's NDP government released its long-awaited 2016 budget entitled "The Alberta Jobs Plan". Alberta's deficit will be $10.4 billion this year, thanks in part to a 90% decline in royalties and lower revenues from income taxes. The government is dissolving 26 agencies, capping MP salaries, limiting growth in health care spending and deferring some election promises to help limit the red ink.
The Alberta government is assuming an average oil price of $42 for the 2016/17 fiscal year, increasing to $54 next year and $64/bbl in 2018/19. Alberta's economy is expected to contract 1.4% in 2016 but return to growth next year. Finance Minister Joe Ceci doesn't expect a balanced budget until 2024 at the earliest.
Ratings agency DBRS promptly downgraded the province's debt rating from AAA to AA (high) citing the government's reluctance to reign in public spending.