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As a result, Alberta’s non-renewable resource revenues, including money from oil and gas royalties and land sales, are expected to plunge 72 per cent to just under $1.7 billion this year, compared with $5.9 billion last year.
The province has also abandoned plans to balance its budget within the next three years as a result of the massive declines in investment and oil and gas revenues.
“Flexibility dictates that government cannot adhere to the plan to balance the budget in 2022-2023,” the province’s mid-year fiscal update states, which also notes that Alberta is facing its biggest economic shock since the 1930s.
In place of a balanced budget, the province is adopting fiscal anchors, which include reducing per-capita public spending to a comparable level with other provinces and a pledge to keep net debt to gross domestic product (GDP) below 30 per cent.
Once the pandemic ends, the province expects to develop a new plan and timeline to balance the budget, but Toews declined to say when it hoped to achieve a balanced budget.
He said it would be “disingenuous” to provide a date for those targets now.
“Reluctantly but necessarily we will have to delay balancing the budget,” Toews told reporters Tuesday.
“Right now, with our great economic challenge and a significant reduction in revenues that will be with us for some years, we will not be able to balance in our first term.”
A major part of the new deficit figure is better-than-expected government revenues, which are now forecast to be $41.4 billion, or roughly $3 billion higher than the government previously expected.
Still, the twin threats of the oil price crash and the coronavirus pandemic have forced the province to revise downward its expected revenues for the next three years.
“Corporate earnings will be much lower this year and next year because of the economic challenge,” Toews said.
The province expects that non-renewable resource revenues and corporate tax revenues will not recover to pre-pandemic levels until 2023.
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