CALGARY — The oil-producing province of Alberta said on Wednesday its 2018-19 budget deficit will be nearly $2 billion (US$1.5 billion) less than previously forecast, but warned congestion on crude export pipelines would continue to hurt the economy.

Higher resource revenues in the first part of the fiscal year as well as personal income tax and federal transfers boosted provincial revenues, the government said in its third-quarter fiscal update.

It now expects the budget deficit to narrow to $6.9 billion in the current fiscal year through March 2019, well below a previous forecast of a $8.8 billion deficit made in March 2018.

Prices for Alberta oil fell in October to record lows compared with U.S. futures prices because of limited capacity on export pipelines that backed up crude in storage tanks. The government imposed temporary production cuts to help relieve congestion and boost prices.

Alberta holds the world’s third-largest crude reserves.

Ongoing impacts from the pipeline bottleneck will continue to be felt in 2019, the statement added.

Alberta’s budget deficit is forecast to come down nearly $4 billion since 2016-17. The government said despite ongoing market access challenges it is aiming to balance the budget by the 2023-24 fiscal year.

© Thomson Reuters 2019