CALGARY -- The Government of Alberta has released its first-quarter fiscal update and is facing the largest deficit in the province's history.

A deficit of $24.2 billion is forecast for 2020-2021, nearly $16.8 billion more than originally estimated in Budget 2020. Alberta's debt is projected to reach $99.6 billion.

"These numbers are incredibly sobering to all of us," said Finance Minister Travis Toews in a statement. "We are facing the most significant economic challenge of our generation."

When Toews unveiled Alberta’s budget in February, it projected a $7.7 billion deficit. Budget 2020 was built on the assumption that the price of West Texas Intermediate (WTI) would average $58 USD per barrel. Instead, the price of oil has hovered much lower than that and the government is now forecasting the price of WTI to average $35 USD per barrel for 2020-21.

The province says a severe decline in revenue coupled with increased expenses — primarily in response to the COVID-19 pandemic and supports for Albertans and Alberta businesses during economic uncertainty — dug Alberta into a hole.   

The lion's share of the drop in revenue — $38.4 billion compared to the Budget 2020 estimate of nearly $50 billion — was the result of significant declines in funds generated from income tax, resources and gaming.

Revenue earned on Alberta's natural resources are only forecast to reach $1.2 billion, which is thelowest it has been in nerly five decades.

"The pandemic, the energy price war and global economic contraction blindsided our economy," Toews said.

Provincial expenses increased to $62.6 billion — $5.3 billion more than outlined in the budget — due in part to $2.5 billion in operating expense spending on COVID-19 and recovery plan initiatives, as well as $632 million in purchases of COVID-19-related personal protective equipment.

The biggest question now, critics say, is how the provincial government will dig itself out of the economic hole.

"It's a wakeup call that our politicians need, because for years our politicians have been hitting the snooze button while spending has been skyrocketing and our finances have been deteriorating," said Franco Terrazzano of the Canadian Taxpayers Federation.

Toews said new taxes won't be coming in the short-and-medium-term, but says Albertans will have to have tough conversations about its revenue in the long-term. He hasn't yet outlined his ministry's plan to balance the province's budget.

"Where is the plan for balance? You don't need a balanced budget tomorrow, you don't need a balanced budget in a year from now, possibly even two years from now. This is the time to go into deficit, when you get this sort of crisis," said Duane Bratt, a political scientist with Mount Royal University.

"But will it be on the revenue side? It doesn't need to be a sales tax, there are other forms of taxation," Bratt added.

Toews will next give a fiscal update in November before unveiling a new budget in February.

This is a developing story. It will be updated throughout the day.