Alberta is projected to incur a $6.4 billion year-end deficit in 2025, $1.2 billion more than initial estimates from the 2025 budget, but $40 million improvement from last quarter, according to the province’s second-quarter fiscal update released on Thursday."As we outlined in a budget, Alberta is facing a significant deficit this year," said Minister of Finance Nate Horner."That means we'll have some tough decisions to make on the road ahead, despite the challenges, Albertans can trust that every decision we make puts their interests firstThe deficit is largely driven a $1.7 billion decrease in revenue from non-renewable resources, compared to the budget estimate. Oil prices in the second quarter averaged $61.5 USD per barrel, $6.50 USD below the original forecast of $68 USD per barrel. "When this government took office in 2022, the price of oil averaged more than $89 US per barrel," said Horner. "Now the forecast for WTI this fiscal year sits at $6,150 USD, a drop of about $28 per barrel from the 2223 fiscal year. Again, for every dollar the price of oil drops, our revenue forecast decreases by hundreds of millions of dollars."Additional lost revenue came from a $15 billion personal income tax total for the province, which was $457 million lower than the 2025 budget projected. The province exceeded the other projected tax value by a combined $260 million, and Alberta, which brought the total lost revenue to $1.17 billion. .Forecasted expenses went up $52 million following the quarter, raising to $79.4 billion in 2025. "We may not be able to control external factors, but we can control our spending to protect the vital services Albertans rely on," Horner said."We will continue to invest wisely, build up the Heritage Fund and pay down debt during the good years, then during difficult years, such as this one, we exercise prudent financial management to ensure we support essential government services for future generations."Operating expenses for the province are projected to be $953 million higher than originally projected, primarily driven by $881 million in increased labour payments after union disputes. Costs resulting from increased operating expenses were largely offset by $953 million from the government contingency fund. Additionally, the government allocated $711 million in emergency and disaster assistance, leaving the contingency fund with $2.3 billion remaining of the $4 billion annual allocation. "I won't get into the specifics of the deals, but part of the reason for having a $4 billion contingency was that unknown," Horner said. "So as deals become ratified, that moves from the contingency portion of the budget to the actual line items, and that's what we'll continue to do throughout this year. "Alberta’s employment landscape improved, as employment levels rose by 2.4% in 2025, leaving the unemployment rate at 7.4%, largely impacted by trade conflicts that have hurt the manufacturing and agriculture industries. "Our economy has shown some resilience, but we continue to navigate tough economic times," Horner said. Positive forecasts from the report included a Canadian leading 2.1% increase in GDP, and a 2.5% population growth. A copy of the full fiscal update is available on the Finance Ministry’s website.
