Eight days after his government released a fiscal plan that called for a balanced budget by 2022/23, Alberta Premier Jason Kenney says the global economic downturn linked to the spread of coronavirus could have already put that plan in jeopardy.
At a news conference Friday, one day after Alberta announced its first presumptive case of COVID-19, Kenney told reporters that evidence is mounting that Alberta’s economy is being hobbled by the global slump in stock markets and oil prices.
“It’s clear now that we’ll be losing some of those gains that we had in the fourth quarter of 2019 and in January of this year,” Kenney said. “But we just don’t know how long and how deep this global trough is going to be.”
Balancing the budget by 2022/23 was an important commitment made by his government just last week, Kenney said.
“However, if there is a major prolonged global downturn, that would obviously affect our plan to get to balance in that timeframe. We do know that in the short term it’s going to have a negative impact on our budget and on our economy.”
NDP Leader Rachel Notley said it’s true that coronavirus is slowing the economy but the government’s plan to balance the budget within three years was never achievable in any case.
“Jason’s Kenney’s plan to balance the budget by 2022/23 was always based on a collection of fantasyland numbers,” Notley said. “It was never real. It looks to me like he’s going to try to use this particular set of circumstances as cover for the fact that he introduced a budget that was absolutely not attainable, with fictional numbers.”
On an annualized basis, every dollar reduction in the price of West Texas Intermediate oil, which traded at about $42 US on Friday, takes about $200 million out of provincial revenues, Kenney said.
“This just underscores the importance of getting our fiscal house in order,” he said. “Because if indeed we do end up in a prolonged global downturn, [the province’s] deficit will go back up, and we need to be prepared for the future.”
Capital plan calls for $19.3B in spending
If the downturn does continue for months, the province could be forced to reassess it’s fiscal plans later this year, Kenney said.
Kenney and Infrastructure Minister Prasad Panda held a news conference Friday to announce the government’s 2020 capital plan, which called $19.3 billion in spending over the next three years.
After the announcement, however, most of the questions from the media centred on the global economic situation well beyond Alberta’s boundaries.
Kenney said his government is doing all it can to create the right conditions to grow the province’s economy.
“But I think all Albertans see what’s going on with the global economy because of the coronavirus,” he said. “Markets are again going down today. The price for Western Canadian select crude oil is trading just over $30 a barrel right now. And we don’t know how long this is going to go on.
“We Albertans are not an island. It is frustrating, after five years of economic decline and stagnation, that just as I think we have been ready to see significant growth in 2020, to see this global downturn from the coronavirus.”
Last week, the Conference Board of Canada projected Alberta’s economy would grow by 2.2 per cent in 2020.
One week later, Kenney said, those projections are now in question.