-- Bank of Montreal (BMO) looks at Canada's fiscal situation after the provincial budget season and ahead of Ottawa's mid-year update.
All is now set against a backdrop of US$100/barrel oil, noted the bank.
The two big oil-producing provinces locked in their budgets ahead of the conflict in Iran and associated surge in oil prices, and budget assumptions immediately look wildly
"conservative," stated BMO.
Alberta assumed US$60.50/barrel for WTI this fiscal year and Saskatchewan assumed US$59.80/barrel, while Newfoundland & Labrador still has to be tabled.
At current levels for WTI, the light-heavy differential and the Canadian dollar (CAD or loonie), the bank could see upwards of $20 billion of revenue upside in those two provinces alone, swinging both well back into surplus.
High oil prices will only add to the widening regional disparity in economic and fiscal performance in the country, according to BMO. The fiscal side of that might be the most "dramatic" reflection.