Alberta Balloons Budget Deficit

Alberta announced on Thursday its budget deficit would increase in the 2019-20 fiscal year, due to a provision for potential losses on crude-by-rail contracts that were signed by the previous Notley government.

Finance Minister Travis Toews said Alberta's deficit is expected to reach $8.7 billion in the fiscal year ending March 31, up from $6.7 billion in 2018-19. The government of Premier Jason Kenney said it would return to a surplus by 2023.

Alberta's real gross domestic product is forecast to grow 0.6% in 2019, down from an estimated 2.2% in 2018.

It was the first budget delivered by Alberta's United Conservative Party government, elected in April with promises to cut spending and revive the economy.

The province has struggled to recover from the 2014-2015 global oil price crash because of delays in building new export pipelines and falling capital investment.

The previous New Democratic Party government signed $3.7 billion in crude-by-rail contracts with rail and midstream companies to help move oil from the province. Congestion on oil pipelines led to a glut of crude building up in Alberta and sent the discount on Canadian crude spiraling to record levels.

Kenney slammed the contracts as an unacceptable risk to taxpayers and his government has been in talks with oil companies about the private sector taking over those crude-by-rail deals, although no agreements have been announced so far.

The budget contains a $1.5-billion provision to "extricate taxpayers" from the crude-by-rail program.

Toews said Energy Ministry was working on offloading the contracts and he believed there would be an announcement in coming weeks.