Scotiabank Sees Alberta's Provincial Budget Going Further in the Red

12:03 PM EST, 02/26/2026 (MT Newswires) -- Alberta will release its 2026-27 budget at around 5:15 p.m. ET on Thursday, said Scotiabank.

While the province recorded a sizeable surplus of $8.3 billion, or 1.8% of gross domestic product, in 2024-25, lower oil prices and higher spending on health and education have pushed the province into the red this year, noted the bank. Alberta's mid-year update estimated a deficit of $6.4 billion for 2025-26, up from the initial estimate of $5.2 billion in Budget 2025.

Budget 2026 is likely to increase projected deficits further, especially for future years, given that oil prices trended lower rather than the expected higher over most of the past year, although a narrower WTI-WCS differential is providing an offset, stated Scotiabank.

The province's premier of Alberta has warned people to "brace themselves" for deficits in this budget, and over the last week the government has announced that the budget will include a 22% increase ($1.4 billion) in pay for doctors and a 7% increase in education funding ($700 million). However, the premier has also said that there will be some spending reductions, including through cuts to "unnecessary bureaucracy" and new income testing for some benefits.

The province's premier has also announced an October referendum that will seek public guidance on a variety of proposals, including limiting the access of temporary residents to the health system.

Alberta's current fiscal rules limit the allowable 2026-27 deficit to around $7 billion and require a plan to balance the budget by 2028-29, though rules of thumb indicate that the revenue shortfalls alone could push the 2026-27 deficit to close to $10 billion, the bank said.

Despite the fiscal headwinds, Alberta is likely to continue to have the lowest provincial debt burden, and contingency buffers in the budget and recent increases to oil prices provide some upside risk to overperform on the deficit projections, added Scotiabank.

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