Alberta delivers rosy economic forecast, but not everyone is impressed
Alberta Finance Minister Joe Ceci delivered an optimistic second quarter fiscal update this week, promising to "responsibly and carefully" balance the budget eventually without "extreme and risky cuts."
The government has revised their 2017 GDP growth forecast from 3.1% to 4.0%, leading all Canadian provinces on economic growth. The positive figures come after two consecutive years of contractions.
Despite lower revenues, the 2017/18 deficit forecast has been reduced by $183 million to $10.3 billion. Among the green-shoots, Ceci points to the addition of 70,000 full-time jobs since mid-2016 and a doubling of rig counts in the energy patch.
Ratings agency DBRS was less than impressed with the government's revised forecast, noting that the province is still running large operating deficits and rapidly accumulating debt. DBRS downgraded Alberta from AA (high) to AA and maintained its Negative trend, pointing to the government's unwillingness to address Alberta's high level of per capita spending while insisting on maintaining some of the lowest tax rates in the country. DBRS says "Alberta’s fiscal outlook remains the weakest among all provinces," noting that it sees no path to balance unless oil prices stage a spectacular recovery.
The NDP government will now embark on two months of public consultations, giving Albertans a chance to voice their opinions on cutting costs versus protecting public services.
The provincial government is banking on an oil price of US$49 WTI.