Premier Danielle Smith is telling Albertans to “brace themselves” for a challenging fiscal outlook as the province prepares for a televised address this Thursday, just one week before the 2026 provincial budget is tabled. The province is grappling with significant economic headwinds, including low oil prices, uncertainty surrounding tariffs and upcoming CUSMA negotiations. These factors have put a considerable strain on Alberta’s bottom line compared to previous years. “When we came in, we had a $100 barrel of oil, so of course you can generate surpluses with that, especially with the level of production. Our budget needed $74 West Texas Intermediate to balance, and it’s been below $60 for most of the last year,” Smith said. Growing deficits The province’s latest fiscal update paints a stark picture, forecasting a $6.4 billion deficit for the 2025/26 fiscal year. This figure marks a $1.2 billion increase over the projections originally laid out in Budget 2025. The premier indicated the province may be stuck in the red until global market conditions improve and internal energy projects scale up. “We’re just wanting people to brace themselves that just like every other province and the federal government in virtually every jurisdiction around the world, there’s unfortunately going to be deficits until we start seeing some oil prices turn around and getting new production online,” Smith said. The ‘silver lining’ Despite the grim forecast, some experts suggest Alberta is better positioned to weather the storm than its provincial peers. Randall Bartlett, deputy chief economist at Desjardins, noted Alberta’s fundamental fiscal health remains a national leader. “There is a silver lining when it comes to Alberta’s fiscal position and that’s that it has the strongest fiscal starting point of any province in Canada,” Bartlett said. “Alberta has the lowest net debt to GDP ratio of any province in the country. It came into this with the lowest cost of servicing as debt in the country. It came into this shock with some of the smallest deficits in the country. So, Alberta is in a very strong fiscal position.” Managing expectations While the balance sheet might be strong relative to the rest of Canada, political analysts believe the upcoming address will focus on tightening the belt. Lori Williams, a political scientist at Mount Royal University, expects the premier to set the stage for a period of restrained spending. “I think it’ll be a bit of an austerity budget, managing expectations, promising for better things in the future,” Williams said. Still, Williams questioned if a message of restraint will resonate with a public currently facing high costs of living and strain on public services. “Whether that’s going to satisfy Albertans who are struggling with affordability and with access to health care and concerns about education, that’s the big question. Will this be the sort of thing that Albertans are willing to accept, given all the promises this government has made,” Williams said. How to watch The premier’s address airs Thursday at 6:45 p.m. on CTV Calgary. Budget The provincial budget will be officially tabled on Feb. 26.
