Opposition fears rating downgrade as province’s financials deteriorate
Lower credit rating would lead to higher borrowing, debt-service costs: Fildebrandt
One thing Alberta’s four opposition parties could agree on after Thursday’s budget is that Alberta is in danger of another credit downgrade.
Interim Progressive Conservative leader Ric McIver said the NDP government is gambling the future of young Albertans for short-term political gain.
“I’m worried about another credit downgrade. We crossed the Rubicon last year in the thirdquarter report from being a netasset province to now we’re a net-debt province,” said McIver.
“That means something to those people who set credit ratings.”
Last May, Standard & Poor’s reduced the province’s rating to AA from AA-plus, which was the second such drop by the financial services company in five months. At the time, Finance Minister Joe Ceci shrugged it off, saying the agency wanted Alberta to institute a provincial sales tax to raise revenue and that wasn’t in the government’s plans.
At a news conference Thursday, Ceci said the credit ratings are something he thinks about when creating the budget, but that he was mostly focused on delivering services Albertans rely on.
Wildrose finance critic Derek Fildebrandt said a downgrade would cost Albertans money because the province would be forced to repay debt at a higher interest rate.
“We’ve warned repeatedly that unless we got our fiscal house in order, we’d be facing a credit downgrade,” said Fildebrandt. “I unfortunately do fear that we’re going to face another credit downgrade.”
Acting Liberal leader David Swann said he generally agrees with the government’s reasoning on why it has to run deficits, but he wants to see a clear plan on how to get back to balance. That’s something the ratings agency will also be looking for, he said.
“There’s no question we’re going to see more questions about our spending as it’s going up and up with no plan to reduce it,” said Swann.
Swann said he would like to see the province implement a modest sales tax to bring in more revenue.
Alberta Party Leader Greg Clark said a downgrade would play havoc with some of the government’s forecasts on debt-servicing costs.
“I’m very worried about a credit downgrade,” Clark said. “Our credit rating will go down and our costs to borrow will go up.”
Clark said his party has modelled the government’s budget and can’t see a path to balance, other than “crossing their fingers and hoping oil goes up.”
We’re going to see more questions about our spending as it’s going up and up with no plan to reduce it.