Like other provinces across Canada, Alberta is facing growing financial challenges as global economic uncertainty affects Q1 projections. The first quarter update projects the 2025-26 deficit will reach $6.5 billion, up $1.3 billion from Budget 2025’s forecast. The most significant factor in the growth of the deficit is related to a 38 per cent decline of natural resource revenue, which has decreased from its peak of $25.2 billion in 2022-23 to a forecast of $15.7 billion in 2025-26.
Alberta is also facing added pressure from a growing population, which is projected to increase 2.4 per cent in 2025-26. Other external factors including lower oil prices, tariff threats and slowing global growth are impacting the province’s bottom line. Even with these challenges, Alberta remains committed to prioritizing essential services such as health care and education, while keeping everyday costs like childcare, utilities and housing affordable for families.
“We know the road ahead has its challenges, but with disciplined financial management and smart investments, we will stand by families, rein in the deficit and secure a stronger future.”
More than half, or $2.5 billion, of the $4-billion contingency set aside in Budget 2025 remains to address expense pressures this year. To date, allocations include $706 million for disaster and emergency spending, with $700 million for wildfire response and $6 million to replant trees in affected areas. Another $752 million has been allocated to cover increases not offset by dedicated revenue.
The province continues to engage with federal partners to ensure Alberta’s fiscal interests are protected, key industries are supported, and critical infrastructure is built. Despite external shocks, Alberta’s economy remains resilient. Its real GDP is forecast to lead Canada, and the private sector continues to perform strongly with investment, construction and labour market activity supporting stability.
Alberta’s government is working on a broader strategy to further diversify the economy, reduce vulnerability to oil price swings and trade disruptions, and build a stronger, more resilient Alberta.
Key facts:
- Operating expense is forecast at $65 billion, $679 million more than Budget 2025. This is primarily due to an increase in public-sector wage growth.
- The forecasted price of oil this year is $63 USD per barrel, a decrease of $26 USD per barrel since 2022, when the price of oil averaged over $89 USD per barrel.
- In the first quarter of 2025-26, both Saskatchewan and New Brunswick exceeded their budget forecasts, facing unexpected financial pressures. Saskatchewan shifted from a projected $12-million surplus to a $349-million deficit, and New Brunswick’s deficit climbed to $668.7 million, above its budgeted $549 million.
Related information
- 2025-26 First quarter fact sheet
- Learn more about Budget 2025 here: Budget | Alberta.ca
Related news
- Budget 2025: Meeting the challenge | Budget de 2025 : Relever le défi | alberta.ca (February 27, 2025)