Alberta Budget 2025: Crude Realities

In light of looming US tariffs and volatile oil prices, the Government of Alberta has reversed course and is now projecting a series of deficits over the next three years.

A notable decline in revenue projections is the main story of the updated plan, partly explained by lower oil prices. The Budget’s signature policy—an income tax cut costing $1.2B annually—also weighs on the bottom line.

That said, the plan features prudence in two areas: a beefed-up contingency fund and conservative oil price assumptions. With fiscal sensitivity to crude values reaching historic highs, natural resource revenues have contributed to the bulk of the deterioration in the bottom line. However, this could also be a blessing in disguise. Conservative oil price assumptions, particularly the WCS-WTI differential which is assumed to widen to 17.1 US$/barrel in FY2025–26, provide a sizable buffer to the outlook.

Spending increases have been kept incremental and well below updated population forecasts as the province continues its program review to find efficiencies.

A return to deficits has put the province’s net debt burden on an upward trajectory. But with the net debt-to-GDP ratio projected to reach 9.3% by the end of the forecasting horizon, it remains manageable and well below most of its peers. Borrowing requirements have been raised to $11.4B in FY26, $13.9B in FY27, and $20.8B in FY28.

With all provinces’ public finances coming under pressure from the potentially significant economic impact of looming US tariffs, Alberta sets an example of prudent planning, positioning the province well to weather the tremendous uncertainty ahead.