Alberta will make the biggest single-year debt repayment in its history as surging oil prices boost revenue and generate a $13.2 billion (US$10 billion) budget surplus.  

The province will pay off $13.4 billion in debt due in the year that ends in March and allocate $5.2 billion to debt due in the next fiscal year, the government said Wednesday. Taxpayer-supported debt is forecast to fall to $79.8 billion by March 31, $10.4 billion less than originally estimated in the current budget. 

Alberta, which holds the world’s third-largest oil reserves, is reaping a fiscal windfall from oil prices that surged as high as US$130 a barrel after Russia’s invasion of Ukraine. The new projected surplus is 25 times bigger than the originally forecast $515 million surplus and marks a reversal of fortunes for Alberta, which ran a $17 billion deficit in the fiscal year ended March 2021 amid depressed oil prices and tumbling energy investment. 

The province’s revenue in the current fiscal year is forecast to reach $75.9 billion, which includes oil-sands bitumen royalties of $20.1 billion and record corporate income taxes of $6.1 billion. Expenses will total $62.7 billion.

The budget assumes West Texas Intermediate oil will average US$92.50 a barrel for the year, US$22.50 higher than originally projected.

The rising prices will increase oil and gas investment by about 35 per cent this year, which mostly reflects higher costs. Growth in real spending in the sector may be up “modestly” as companies repair their balance sheets. About 30 per cent to 40 per cent of cash flow is being reinvested by energy companies. 

Other highlights from the budget update include:

  • The basic personal tax amount will rise to $19,814 in the current tax year and increase again in the following year as those levies are again indexed to inflation. An additional 80,000 to 95,000 Albertans will pay no provincial personal income tax by 2023.
  • The government plans to make the largest single-year addition in the province’s Heritage Savings Trust Fund by retaining the fund’s net investment income of $1.2 billion from the current year and investing $1.7 billion from the surplus.
  • Alberta’s population will grow 2 per cent in the 2022 census year, accelerating from 0.5 per cent growth in 2021.