(Adds opposition party reaction, bond market reaction)
By Nia Williams
CALGARY, Alberta, April 14 (Reuters) - The Canadian
crude-producing province of Alberta said on Thursday it will
post a C$10.4 billion ($8.10 billion) budget deficit this fiscal
year and warned that a surplus might not return until 2024 as
the oil price slump batters its economy.
Alberta, home to Canada's oil sands and the No. 1 exporter
of crude to the United States, has been hammered by a plunge in
prices to around $40 a barrel from $105 in mid-2014.
The New Democratic Party government, which swept to victory
last May, had said it was prepared to tolerate deficits, and
Finance Minister Joe Ceci reiterated it would protect public
services.
"The first option is to slash and burn vital programs that
Alberta families count on, and that's the wrong path," Ceci
said. "Instead we will carefully maintain spending, ensuring we
are spending every tax dollar wisely while helping Albertans
weather this storm."
Alberta will borrow heavily to fund its fiscal plan, with
total debt hitting C$57.6 billion by 2018-19, or 15.5 percent of
nominal GDP. As a result, the government will scrap legislation
introduced last year to limit debt-to-GDP to 15 percent.
Ceci pledged to keep funding stable for health, education
and social services but save C$600 million in operating expenses
over the next two years through measures including a freeze on
managerial salaries and merging or dissolving 26 government
agencies.
The government will invest C$34 billion in a five-year
infrastructure plan on projects including roads, bridges,
schools, hospitals and spend C$250 million over two years to
support job creators.
Alberta is also cutting the small-business income tax rate
to 2 percent from 3 percent.
Over five years Alberta expects a new carbon levy to raise
C$9.6 billion, of which C$6.2 billion would be invested in green
infrastructure and renewable energy projects, while the
remainder would help cover consumer rebates and the
small-business tax rate reduction.
The opposition Wildrose party slammed the NDP's spending and
borrowing plans.
"The NDP plan will hit families hard this year with a
worsening economy, a punishing new carbon tax and dangerous new
levels of borrowing," Wildrose leader Brian Jean said.
The difference in yield between Alberta's 10-year bond and
the Canadian government benchmark has narrowed more than 25
basis points since mid-February to 100.5 basis points on
Thursday, its narrowest since Jan. 5, as a partial recovery in
oil prices improved the province's economic outlook.
($1 = 1.2844 Canadian dollars)
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Key figures from the Alberta 2016-17 budget
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