Finance minister Ceci to woo financiers in Toronto, New York
Another credit rating agency has downgraded Alberta just as Finance Minister Joe Ceci takes his battle to restore the province's economic reputation to Toronto and New York.
Citing several years of planned deficits and the province's reluctance to “fully utilize its taxation powers,” Moody's on Monday downgraded the province's credit rating to AA1 from AAA.
In a statement, Ceci said he was disappointed by the downgrade, but defended his government's strategy.
“Around the world, companies and governments engaged in petroleum production are facing ratings downgrades. In Alberta, we are in a better position than most to manage these pressures, while we work to make Alberta less vulnerable to selling one commodity at one price,” his statement said.
Financial analysts, however, see Alberta's outlook more negatively.
In December, Standard & Poor's lowered Alberta's credit rating to AA-plus from AAA. On April 15, the day after the government introduced its 2016-17 budget bearing a $10.4-billion planned deficit, Dominion Bond Rating Service announced it had lowered the province's long-term debt rating to AA (high) from AAA.
Alberta's provincial budget assumes oil will rise to $64 US a barrel by 2018, which is significantly more optimistic than Moody's prediction of $43 US a barrel two years from now.
Lower credit ratings means it will cost the province more to borrow the $58 billion it plans to take on loan by 2018.
In his statement, Ceci said the provincial government could have made “reckless” choices like firing teachers and nurses and raising taxes to balance the books.
Faced with the lowest anticipated resource revenue in 40 years, the government instead chose to invest in construction projects that create jobs, such as more affordable housing projects and new long-term care homes, Ceci said.
Attempting to cap growth in health-care spending to two per cent annually shows the government is increasingly prudent with the public purse, Ceci said. While B.C. will spend 5.5 per cent of its budget servicing debt this year, 2.4 per cent of Alberta's 2016-17 revenue will go to debt payments, he said.
Ceci, plus a political staffer and two Finance Department employees, headed to Toronto and New York to woo back credit rating agencies and international investors Monday. The trip will cost around $5,700, a government news release said.
“The opportunity to meet faceto-face with business leaders not only helps raise our profile, but also provides a valuable opportunity to highlight Alberta as one of the world's most stable and progressive energy producers,” Ceci said in another news release.
Although Ceci has said retaining public services is more important than the province's credit rating, the minister told a Calgary Chamber of Commerce breakfast he's “going to fight” to restore Alberta's standing.
Ceci will also give speeches at the Canadian Association of New York and the Economic Club of Canada, as well as meeting with economists and international investors. He'll spend two days in Toronto, then two days in New York.
“We want the financial community to understand the global price shock Alberta faces, along with the prudent path we've taken to address this challenge, and the fact our province remains a great place to invest and do business,” Ceci said in the news release.
With files from James Wood