Nate Horner, President of Treasury Board and Minister of Finance delivered a mid year update which he says shows positive results.
Alberta is forecasting a surplus of $5.5 billion in 2023-24, an increase of $3.2 billion from Budget 2023. The province’s fiscal outlook continued to improve in the second quarter of 2023-24, boosted by strong bitumen royalties and higher income tax revenues.
However, volatile oil prices, continued inflation challenges and uncertainty due to slowing global growth could still affect the province’s finances going forward. Debt servicing costs will be higher than previous years due to higher interest rates, reinforcing the importance of the government’s commitment to balance the budget.
“Alberta continues to stand out as a leader when it comes to fiscal stability and economic resilience in the midst of so much global uncertainty. Our second-quarter fiscal update is another positive report, showing strength in Alberta’s finances and economy and positioning us for future growth and prosperity,” said Horner.
The government continues to keep funds in the province’s contingency for disasters and emergencies. The government’s new fiscal framework requires the government to use at least half of available surplus cash to pay down debt, freeing up money that can support the needs of Albertans for generations. The government continues to reduce the province’s debt burden and will pay down a forecasted $3.2 billion in debt this fiscal year.
Alberta’s government is turning its focus to developing next year’s budget, so it supports Albertans’ needs and the province’s economic growth while maintaining the government’s commitment to responsible spending within the fiscal framework. Budget 2024 consultations are open and Albertans are encouraged to share their feedback to help set the province’s financial priorities.
Revenue for 2023-24 is forecast at $74.3 billion, a $3.7-billion increase from Budget 2023. The increase is due to increases across different revenue streams. In addition, the price of West Texas Intermediate (WTI) oil is forecast to average US$79 per barrel over the course of the fiscal year, in line with the Budget 2023 forecast.
Personal and corporate income tax revenue is forecast at $21.8 billion, $1.8 billion higher than at budget. Bitumen royalties are forecast at $14.4 billion, an increase of $1.8 billion from budget. Overall resource revenue is forecast at $19.7 billion, $1.3 billion higher than the budget forecast.
On the expense side, expenses for 2023-24 is forecast at $68.8 billion, a $481-million increase from Budget 2023. Capital grants are up marginally from Budget 2023, but down from the first-quarter forecast, mainly due to funding schedules for Calgary and Edmonton LRT projects. Debt servicing costs are forecast to increase $309 million from budget, a reflection of ongoing high interest rates and inflation.
$1.2 billion in disaster and emergency costs are forecast for the current fiscal year, which inscludes $750 million for fighting wildfires in the province, $165 million for AgriRecovery to support livestock producers affected by dry conditions, $253 million to provide financial assistance to communities for uninsurable damage from spring wildfires and summer flooding and $61 million for evacuation and other support.