Tumbling oil prices mean Alberta faces $500M deficit: premier

Financial analysts say they expect layoffs in Alberta's oilpatch as a result of sliding oil prices. Global News

EDMONTON – Alberta Premier Jim Prentice says the plummeting price of oil means the province is facing a $500-million deficit this year instead of a budget surplus.

In an interview with The Canadian Press, Prentice says that his advisers project oil prices will rebound slowly over time, but Alberta may not see a balanced budget until the 2017-18 fiscal year.

READ MORE: Albertans might have to get used to the idea of a deficit: Prentice 

Oil prices, the lifeblood of Alberta’s economy, have been in free fall since last summer and tumbled to below US$50 a barrel this week.

Watch: The province’s deficit will be billions of dollars ‘more’ than first expected. Gary Bobrovitz reports.

As late as November, the government still hoped to run a $933-million surplus this year.

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READ MORE: Alberta stays in black despite oil free fall 

Prentice says the plan now is to budget for oil at $65 a barrel in the next fiscal year, but that would still mean almost $7 billion in lost revenue. He says his government will look at cutting expenditures, raising revenues and dipping into a $5-billion rainy day contingency fund.

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