Three years of debt, laid out in Alberta’s latest budget, could put the province into a difficult position, says the Conference Board of Canada.
The board is sharing its thoughts on Budget 2025 and said it’s a document based predominantly on uncertainty.
“Alberta opted to take a cautious approach, forecasting relatively weak GDP growth of only 1.8 per cent, similar to our own forecast despite different assumptions, and planning with additional contingencies throughout the budget years,” it said in a statement on Friday.
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On Thursday afternoon, the province presented a budget that projects deficits over the next three years, beginning with $5.2 billion in 2025-26, $2.4 billion in 2026-27 and $2 billion in 2027-28.
Last November, Finance Minister Nate Horner projected a surplus.
The Conference Board of Canada says the deficits come from emergency contingencies and trade risks.
“Alberta’s baseline forecast assumes that Canada will face on average 15 per cent tariffs on all goods, except for energy products, which will face a 10 per cent tariff,” it said.
Earlier in February, the board released data indicating that Alberta would face much stronger impacts because of U.S. tariffs due to the province’s reliance on trade and the oil sector.
The board said if tariffs come into effect, there could be bigger deficits “closer to the downside forecast presented in the budget.”
“Royalties are expected to pose the biggest challenge to the fiscal outlook, with the budget estimating a decline of more than $4 billion in bitumen royalties in fiscal year 2025-26 compared to the past fiscal year,” the board said.
“That forecast assumes a West Texas Intermediate price of US$68, lower than our own forecast.”
The board did note Alberta’s proposed income tax cut of eight per cent for the first $60,000, which would amount to a $1.2 billion cut, as its “hallmark policy.”
However, it added spending is broadly restrained and is directed mainly to health care and education.
Nevertheless, the Conference Board of Canada says Alberta’s fiscal health remains strong, which could serve as a buffer against possible risks.
“Revised estimates for fiscal year 2024–25 project a surplus of $5.8 billion, exceeding last year’s budget projection by $5.4 billion, largely due to higher-than-expected oil prices,” it said.
“The province’s baseline scenario still forecasts the provincial economy to grow 1.8 per cent in 2025 despite widespread tariffs, which is somewhat optimistic based on our own analysis.”
