File photo of the Alberta legislature (Lethbridge News Now)

By Justin Goulet

Impacts of COVID-19 and oil price collapse result in historic deficit for Alberta

Aug 27, 2020 | 10:11 AM

EDMONTON, AB – It’s been a tough year for Alberta.

The provincial government provided a financial update Thursday morning. A deficit of $24.2 billion is forecast in the first quarter report for 2020-2021.

That’s $16.8 billion higher than estimated in the Budget 2020, which was presented in February before the World Health Organization declared COVID-19 a worldwide pandemic.

The province took immediate action by adding $500 million to the budget for Ministry of Health expenses. Over the last few months, COVID-19 has had a significant impact on the provincial economy, preventing travel and reducing the demand for energy.

The government says Albertans have experienced losses of more than 170,000 jobs and a 13 percent unemployment rate. The province now sits on a debt burden of $99.6 billion, or $22,400 per Albertan.

What's Happening in Lethbridge this week: December 2-8, 2024

23h ago

What's Happening in Lethbridge this week: November 12-17, 2024

Nov 12, 2024

What's Happening in Lethbridge this week: November 4-10, 2024

Nov 04, 2024

Finance Minister Travis Toews noted that almost 70 percent of the deficit increase is due to a sharp decline in income, with non-renewable resource revenue down $3.9 billion. Total revenue is estimated to be $38.4 billion, down $11.5 billion from the 2020 budget.

“Revenues will be down $11.5 billion, or 23 percent. Personal income tax revenue will be down 15 percent, corporate income tax revenue will be down approximately 53 percent and non-renewable resource revenue will be down over 75 percent,” Toews said.

Largely due to COVID-19 relief, total expense is forecast at $62.6 billion.

“Expenses will be up by $5.3 billion, largely due to COVID relief, extra funding for our healthcare system and funding for Alberta’s Recovery Plan,” added Toews.

Alberta’s real GDP growth is anticipated to contract by 8.8 percent in 2020. That’s the largest decline in modern-day history and a decrease of 11.3 percentage points from the budget forecast.

“Nominal GDP is expected to contract almost 14 percent in our current fiscal year. Employment is forecast to fall seven percent and the unemployment rate is expected to rise to an average of 11.6 percent this year,” Toews said.

The Minister added that during these uncertain times, the province’s focus is on delivering the most cost-effective government services possible, as well as doubling down on efforts to encourage economic growth in the province.

“That’s why we rolled out Alberta’s Economic Recovery Plan in late June of this year. Alberta was the first province to roll out an economic recovery plan, and we believe economic recovery and growth is absolutely essential in dealing with our long-term fiscal challenge,” said Toews.

In the province’s annual financial report, the deficit was $12.2 billion for 2019-2020. Toews showed optimism, despite tough challenges the province has faced this year and those that are to come.

“During this last week, I had the privilege to tour a good part of the province, and I encountered Albertans who remain optimistic, Albertans who are innovative, Albertans who are resilient. That is our history, in this province – it’s this resilient, entrepreneurial character that gives me great confidence that some of the best days for this province lie ahead.”