DBRS concerned about growing debt in Alberta
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.