Alberta Government Announces 2nd Quarter Fiscal Update

The Alberta government on November 28, 2018 announced their second quarter fiscal update. The government generally seemed positive about the current numbers, while concerns continue to grow over future issues such as pipelines and oil prices.

Compared to last year, 42,000 new jobs were created in the province. Average weekly earnings remain strong and manufacturing sales are up 8.5 per cent.

The Capital Plan remains unchanged from Budget 2018.

The deficit has dropped by $1.3 billion since Budget 2018 with the $500 million risk adjustment remaining in place to protect against price volatility. As a result, our government remains on track to balance the budget as planned in 2023.

However this recovery faces a serious threat from the differential. Inadequate pipeline capacity and inaction by the federal government on crude by rail has led to a widening differential. The decline in the price of Western Canadian Select (WCS) over the past months has weighed on Alberta’s economic outlook.

2018-19 Second quarter forecast ($ millions)

Full-year forecast Budget 2018 Q2 forecast Change from Budget
Income taxes 15,938 16,318 380
Non-renewable resource revenue 3,829 5,322 1,493
Other revenue 28,113 27,965 (148)
Total revenue 47,879 49,605 1,726
Operating expense (excluding CLP) 47,765 47,886 121
Climate Leadership Plan operating expense 1,035 1,029 (6)
Disaster/emergency assistance expense 206 459 253
Other expense 7,175 7,243 68
Total expense 56,181 56,617 436
Risk adjustment (500) (500)
Deficit (8,802) (7,512) 1,290
Energy and economic assumptions Budget 2018 Q2 forecast Change from Budget
WTI (US$/bbl) 59.00 64.00 5.00
Exchange rate (US¢/Cdn$) 80.0 77.50 (2.5)
Real GDP growth (%) 2.7 2.5 (0.2)

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