The diving dollar is one of few bright spots for Alberta’s finances as energy prices continue to slump.
The Canadian dollar hit its lowest level since 2004 this week as oil prices resumed their fall and recession worries grew, with the loonie sliding to 76.69 cents US Thursday.
While plunging oil prices have hammered Alberta’s bottom line since last fall, a lower dollar softens the blow somewhat.
According to the province, every one-cent drop in the Canadian dollar below budget levels over the course of the year would add $61 million to Alberta’s coffers.
The provincial budget introduced but never passed by the former Tory government this spring predicted the dollar to average 81.5 cents US for the 2015-16 fiscal year.
Janice Plumstead, economist for the Canada West Foundation, said the low-flying loonie helps the government cope somewhat.
“The province will get some benefit, they’ll get a little bit of relief,” she said in an interview Thursday.
“But the price of oil is much more important to the province’s bottom line.”
Prices for both Western Canadian Select and West Texas Intermediate crude are lower than calculations used in constructing the budget, which projected a $5-billion deficit for the year when it was released in March. Each dollar difference between WTI’s average for the year and the budget projection amounts to a $148-million impact on provincial coffers.
The NDP government that defeated the PCs in the May provincial election will introduce its own budget in October.
The dollar’s slump would also have to be prolonged to have much impact. Just over three months into the budget year, the dollar has averaged 80.63 cents US.
But Plumstead noted there are benefits to Alberta’s export-dependent economy from the lower dollar, as commodities are priced with the brawnier American greenback. The province’s tourism industry also stands to benefit from an influx of American tourists, she said.
NDP Finance Minister Joe Ceci — who met with his Ontario counterpart Charles Sousa in Edmonton on Thursday — was not made available for an interview.
In a statement provided by his office, he said the lower Canadian dollar has “mixed impacts” on Alberta.
“We are watching the falling loonie closely, along with the price of oil, as we work on preparations for the fall budget. Alberta’s current fiscal situation is strong, and our plan will ensure it will stay strong,” he said.
[“source – calgaryherald.com”]