Main­tain­ing credit

DBRS con­cerned about grow­ing debt in Al­berta

The Guardian (Charlottetown) - - BUSINESS - BY JOHN COT­TER

An agency is main­tain­ing Al­berta’s credit rat­ing but says the out­look for the long-term is neg­a­tive be­cause of the NDP gov­ern­ment’s un­will­ing­ness to tackle its deficit and grow­ing debt.

DBRS Lim­ited says the rat­ing re­mains at AA-high, but the trend on long-term rat­ings has been changed to neg­a­tive from sta­ble and the province could face a down­grade within a year.

“The neg­a­tive trend re­flects that Al­berta con­tin­ues to erode its low debt ad­van­tage through sus­tained deficit spend­ing,” the agency said in a re­lease Fri­day. “More­over, the province has yet to pro­vide a cred­i­ble plan to re­store bal­ance.”

Credit rat­ings af­fect how much gov­ern­ments pay to bor­row money. Al­berta had a $10.8 bil­lion deficit last year and is fore­cast­ing a $10.3 bil­lion deficit this fis­cal year.

Fi­nance Min­is­ter Joe Ceci has said the NDP gov­ern­ment hopes to bal­ance the bud­get by 2024.

DBRS said it is not con­vinced this can be achieved even though Al­berta’s econ­omy is im­prov­ing and ap­pears to have turned a cor­ner sup­ported by a mod­est rise in oil prices.

“Given their re­luc­tance to use ad­di­tional tax room and the con­tin­ued fo­cus on main­tain­ing ser­vices and fund­ing growth, this ob­jec­tive is highly un­cer­tain since it re­lies on a sus­tained re­cov­ery in eco­nomic ac­tiv­ity buoyed by higher oil prices.”

Ceci re­sponded to the DBRS rat­ing by ac­cen­tu­at­ing the pos­i­tive.

“DBRS has main­tained our AA-high credit rat­ing, rec­og­niz­ing our province’s strong fis­cal fun­da­men­tals and the many pos­i­tive eco­nomic trends and signs of re­cov­ery hap­pen­ing in our province right now,” he said in a state­ment.

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