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Deficit set to grow for 2012

EDMONTON, AB (May 28, 2012): The Alberta government today faces an additional $2.1 billion cash-shortfall in this year’s budget given the downward trend in oil prices, which would bring the total budget deficit to $5.2 billion for 2012. Today in Question Period, Wildrose Official Opposition Leader Danielle Smith questioned how Premier Alison Redford would close the growing deficit gap, brought on by oil prices well below the government’s $99-forecast for 2012. 

West Texas International stood at $91.15 as of this morning. For every dollar below the projected price of oil, the government loses $223 million in revenue. “Even with its rosy projection of $99 oil, the cash deficit was $3.1 billion. With today’s WTI price at $91, that deficit will be $5.2 billion,” Smith said. “So to the Premier, how will she get out of this $2.1 billion-budget hole? By increasing the deficit, raising taxes, or wiping out what’s left of our savings?” CIBC World Markets last week stated the price weakness for oil “will persist for another one to three months, and would look for prices to ultimately bottom in the mid-$80s.” BACKGROUNDER

  2012-13 (in millions) 2013-14 (in millions)
Budget 2012 operating 36,526 38,036
Budget 2012 capital 5,744 5,723
Projected budget deficit 886 (652)
Projected cash deficit 3,104 894
Additional expenses from campaign promises 17 436
Losses based on current energy prices 2,143 3,843
New projected cash deficit 5,264 5,173