The province is forecasting its surplus to be $2.9 billion at the end of 2024-25. While this is $2.6 billion higher than what was forecast at Budget 2024 – largely as a result of higher-than-expected oil prices – the budget is being squeezed as the government works hard to make smart fiscal choices to meet the needs of a surging population.
With a stronger surplus than projected at budget, the government continues to invest in the needs of Albertans while managing its debt and saving for the future. The government’s plan to pay down debt, paired with responsible spending, will save Albertans in the long term and sustain vital programs for years to come.
Moody’s Ratings – one of four major credit rating agencies to upgrade Alberta’s credit rating outlook in the last year – said Alberta’s economic projections could look even brighter in the future as the province continues to limit debt and use its budget wisely. Fitch Ratings stated that Alberta is experiencing an economic rebound.
“People across the country see a bright future for Alberta, and they continue to come here in record numbers. While this population growth is creating challenges and putting pressure on our hospitals, schools and other services, our prudence and discipline are helping to manage these challenges.”
Alberta’s strong economic growth and outlook for the coming year does bring some challenges. Alberta’s population is set to surge 4.6 per cent in 2024 – higher even than in 2023. As the province faces these challenges, the government is taking action to spur opportunity and create prosperity for every Albertan.
The government is making responsible spending decisions to support a growing province. Along with record funding levels for health and education, the province provided an additional $125 million to schools in the first quarter to help with enrolment growth. The government continues to focus on housing and lowering the costs of insurance, utilities and food.
The province also remains focused on supporting families and communities affected by wildfires across Alberta, including the one that devastated Jasper National Park. To date, $573 million has been allocated to disaster and emergency spending from the province’s contingency fund. This includes $550 million to fight the wildfires, $10 million to match donations to the Canadian Red Cross, and $13 million for emergency evacuation payments to evacuees.
Revenue
Revenue for 2024-25 is forecast at $76.2 billion, an increase of $2.7 billion from Budget 2024.
- Personal income tax revenue has increased $458 million to $16.1 billion, reflecting population growth and gains in Alberta’s labour market.
- Non-renewable resource revenue is forecast at $19.8 billion, up $2.5 billion from budget due to higher oil prices, a narrower light-heavy differential, higher oil production and a lower exchange rate.
- Other tax revenue is forecast to be $38 million down from budget, in part because of less tobacco tax revenue and the government’s policy to limit insurance premium increases for good drivers.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $101 million from Budget 2024.
- Operating expense is up by $195 million, mainly due to $125 million more to support enrolment growth and inflation pressures in education.
- Disaster and emergency spending to date is $573 million.
- Just over $1.4 billion remains in the contingency fund for 2024-25.
Oil prices and assumptions
Between April 1 and July 31, the price of West Texas Intermediate oil averaged US$81 per barrel.
- It is now forecast to average US$76.50 per barrel over the course of the fiscal year, US$2.50 higher than the Budget 2024 forecast.
- Heavy oil prices also got a boost in the first half of 2024, narrowing the light-heavy oil price differential to a forecast average of US$14.40 per barrel in 2024-25, US$1.60 narrower than in the budget.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the first quarter to a market value of $23.4 billion, earning a 2.1 per cent return with a net investment income of $509 million.
- Another $2 billion in surplus cash from last fiscal year will be invested in the Heritage Fund in 2024-25, which is expected to boost the fund to more than $25 billion.
- Plans are in the works to build the Heritage Fund to between $250 billion and $400 billion by 2050 so the province is less reliant on resource revenue and has a new source of intergenerational wealth.
Debt
Taxpayer-supported debt is forecast at $86.1 billion as of March 31, 2025, $1.7 billion less than estimated in the budget.
- Debt-servicing costs are forecast at $3.2 billion, down $181 million from budget as a result of the forecast increase to the surplus, which lowers borrowing requirements.
- Following its fiscal framework, the province is using $3.7 billion – half of the $7.3 billion surplus cash from 2023-24 – to pay debt coming due, with $1.8 billion repaid in 2023-24 and $1.9 billion being repaid in 2024-25.
- Of the remaining half, $2 billion is being deposited into the Heritage Fund, and the remaining $1.7 billion is being used to limit new borrowing required in 2024-25.
- While the province remains committed to paying down the debt and saving for the future, after adjustments to the operating surplus, Alberta forecasts it will be in a cash deficit at the end of 2024-25 and will need to borrow $0.6 billion.