The Canadian province of Alberta is projecting a C$6.5 billion budget deficit for the 2025–26 fiscal year, citing a steep decline in natural resource revenue, according to its first-quarter fiscal update released on August 28. The revised forecast marks a significant shift from the C$8.3 billion surplus recorded last year and exceeds the C$5.2 billion deficit projected in the province’s February 2025 budget. Alberta’s finances were hit hard by weaker oil prices, which directly impact the province’s royalty income from energy production. The original budget had been based on a West Texas Intermediate (WTI) oil price of US$74 per barrel.
However, average prices during the first quarter were approximately US$4 lower, reducing anticipated revenue from bitumen, conventional oil, and natural gas. Non-renewable resource revenue, which accounts for nearly one-quarter of Alberta’s total income, is now forecast at C$16.2 billion down C$2.1 billion from earlier projections. Bitumen royalties have been revised to C$9.1 billion, a reduction of C$1.7 billion. Conventional oil and natural gas revenues were also cut by C$457 million and C$221 million, respectively.
Total provincial revenue is now projected at C$67 billion, a C$4.3 billion decrease from the February forecast. At the same time, expenditures have increased to C$73.5 billion, up from the previously budgeted C$72.4 billion. The rise is primarily due to new public sector union agreements, which have added C$650 million to operating costs, according to Alberta Finance Minister Nate Horner. Despite the deteriorating fiscal position, the province has made no changes to its taxation policies or spending framework.
Debt projected to exceed C$100 billion this year
Alberta’s contingency reserve remains at C$1.5 billion, and no new fiscal measures were introduced in the update. The government stated that it would continue to track revenue and expenditure developments through regular quarterly updates. The province’s economic growth is projected to slow to 2.1 percent in 2025, compared to 2.8 percent in 2024. The update attributes the slowdown to reduced worldwide demand, continued global energy market volatility, and persistent inflationary pressure affecting households and businesses.
Alberta’s Heritage Savings Trust Fund reported a market value of C$21.6 billion as of June 30, with a 2.3 percent return generating C$483 million in investment income during the first quarter. While these earnings support the province’s long-term financial stability, they are not sufficient to offset the decline in resource-based revenues. Taxpayer-supported debt is expected to reach C$103 billion by the end of the fiscal year. Debt servicing costs are estimated at C$3.8 billion, reflecting the financial burden of borrowing amid fluctuating income from the energy sector.
The next fiscal update, covering the second quarter of the 2025–26 fiscal year, is scheduled for release in November. It will provide a comprehensive assessment of Alberta’s fiscal position, including updated projections for government revenue, expenditures, debt levels, and economic growth. The update will also incorporate key global and domestic factors influencing the province’s economy, such as commodity prices, inflationary trends, and market demand. This report will help determine whether further adjustments are needed to maintain Alberta’s fiscal stability through the remainder of the fiscal year. – By Content Syndication Services.