EDMONTON — The Alberta government’s credit rating has taken another hit.
Moody’s Investors Service has downgraded the province’s rating to Aa2 stable from Aa1 negative.
The rating service cites weakness in the provincial economy that remains concentrated and dependent on non-renewable resources — mainly oil.
It says reliance on such resource revenue causes volatility in financial performance and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently.
Moody’s also says continued deficits will lead to the province’s debt burden stabilizing at higher levels.
United Conservative Finance Minister Travis Toews blamed the lower rating, which affects how much interest the government pays on borrowed money, on previous governments.
“Over the past four years, the previous government drove Alberta into a fiscal crisis with policies that weakened growth and business competitiveness,” Toews said Tuesday in a release.
“That’s why balancing Alberta’s budget, growing the economy and creating jobs are our top priorities.”
Toews noted that Moody’s did provide Alberta with a “stable outlook” that he says is clear recognition that its plan to balance the budget has merit.
Moody’s says the government’s plan, including reduction in the corporate income tax rate and elimination of the carbon tax, will pressure revenues over the next few years.
At the same time, other economic factors, which influence oil-related revenue growth and private sector investments in the oil sector, remain outside the government’s control.
“As a result, the government’s fiscal projections are subject to material execution risk,” Moody’s said.
NDP finance critic Shannon Phillips said the report shows the government is not moving to diversify the economy and that its corporate tax cut plan is risky.
“We also have further proof the UCP economic plan is not working,” Phillips said in a release. “The $4.7 billion corporate giveaway has created no jobs to date.”
Moody’s has also downgraded the long-term debt ratings of Alberta Capital Finance Authority and the long-term issuer rating of ATB Financial to Aa2 from Aa1.
This report by The Canadian Press was first published Dec. 3, 2019.
The Canadian Press