EDMONTON, Alberta, Feb. 25 (UPI) -- The provincial government of Alberta, Canada, said the pressure from lower crude oil prices meant it was facing a budget crisis not seen in roughly 25 years.
Alberta said it expects to linger in recession. The economy, measured in real gross domestic product, should shrink by 1.1 percent in 2016, after a 1.5 percent decline for full-year 2015. The total revenue forecast for the fiscal year of $31.2 billion is $478 million lower than estimated in the budget last year.
The vast majority of oil sector activity in Canada is centered in Alberta and the provincial government said it expects energy investments in the province to decline by 22 percent this year.
"This is a once-in-a-generation economic challenge," Finance Minister Joe Ceci said in a statement.
The economy in Canada relies heavily on the energy sector and nearly all of its oil and gas exports target a U.S. market less dependent on foreign reserves because of the shale boom. Lower export revenue and even lower crude oil prices are hurting exporting economies like Canada's.
Moody's Investors Service in January changed the long-term debt rating for Alberta from stable to negative, though the AAA rating remained in place. Without some form of corrective action, the province may be faced with a rapid rate of debt accumulation.
Ceci said that, while the government can't control oil prices, it can control its spending and all outgoing revenue streams in the province are under review. The provincial government said the collapse in oil prices, down about 42 percent from this time last year, has "significantly impacted" incoming revenue streams.
In terms of unemployment, the government expects rates to increase from 6 percent to 7.4 percent in 2016.