Alberta government reports that higher than expected resource revenue is driving its surplus forecast for 2008-2009 to $8.5 billion.

The government announced today that revenue for 2008-2009 is forecast at $46.6 billion, an increase of $8 billion from the 2008 povincial budget, meanwhile projected expenses are up just $1 billion to $38.1 billion. The surplus is now forecast at $8.5 billion, an increase of $7 billion from budget.

The increase will enable the government to increase its savings this year and cover the full cost of two new initiatives aimed at reducing greenhouse gases, it said. Total savings is now forecast at $3.1 billion, an increase of $2.8 billion from budget.

Additionally, cash available as a result of the surplus will be used to create a $2-billion fund to advance carbon capture and storage projects and another $2-billion fund to support energy-saving public transit initiatives. An additional $1 billion will be placed into government’s capital account for infrastructure projects.

“Alberta’s economy continues to do well despite a general slowdown in global economic activity,” said Finance and Enterprise Minister Iris Evans. “The additional revenue from the surplus gives us the opportunity to address the priorities of Albertans, including caring for our environment through the carbon capture and Green TRIP funds.”

Alberta’s mid-year economic update indicates that the province will fare well, despite uncertainties in the global economy. Its real GDP growth for 2008 is expected to be 2.6% compared to the Budget 2008 forecast of 2.9%. This decline can be attributed to a faster-than-expected correction in the housing market, and temporary declines in oil production in the first half of 2008. This decline will constrain growth in oil exports in 2008, but a forecasted rebound in 2009 will boost growth next year, it said.