CALGARY, Alberta—Alberta expects its budget surplus to hit $4 billion this year, a $1.5 billion jump from its last forecast, due to higher-than-expected energy, investment and tax income, the province said on Tuesday.
Alberta said in its second-quarter update that it now expects revenues for the 2007-08 fiscal year of $37.5 billion, 6 percent above its April budget estimate and 4 percent above its August outlook as it reaps the benefits of a record surge in oil prices.
In August it forecast a $2.5 billion surplus, an increase of $300 million from its budget.
Expenses are now pegged at $33.6 billion, down about $100 million from the first-quarter update.
The province, which has just announced plans to boost oil and gas royalties, said it will commit $1.7 billion to savings, including $1.3 billion to the Alberta Heritage Savings Trust Fund, which invests a portion of resource revenues.
"We are increasing our savings and capital allocations as a result of higher revenues from income tax, investment income and nonrenewable resources," Finance Minister Lyle Oberg said in a statement.
But he said the Conservative government of Premier Ed Stelmach is keeping a close watch on volatility in commodity and foreign exchange markets to assess the impact on its long-term planning.
The province said it boosted its estimate for average U.S. oil prices to $80 a barrel, up $16 from its August forecast. Oil jumped 3.6 percent on Tuesday for a record close of $98.03 a barrel.
It increased its estimate for the value of the Canadian dollar by nearly 6 U.S. cents to 98.7 U.S. cents. Alberta also cut its average Alberta wellhead gas price assumption to $6 a gigajoule, 50 Canadian cents lower than its August outlook.
Resource revenues are now expected to be $792 million higher than the budget figure of $10.3 billion.
The province said oil royalties are expected to be $1.5 billion higher than in the budget, but natural gas royalties could be $600 million lower due to sharply lower gas prices.
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