Alberta hit by another credit rating downgrade
S&P Global Ratings downgraded Alberta's credit rating Friday by two notches from AA to A+ due to projected deficits and a rapidly growing debt.
"Alberta's projected deficits after (capital expenditure) over the next two years are among the highest of rated non-U.S. local and regional governments and, absent other measures, our expectation is that this will lead to further rapid growth in the province's debt burden," the ratings agency said in a report.
The report said unless the government undertakes "material fiscal reforms" to address budgetary shortfalls and stimulate the economy, "Alberta will continue to post, on average, significant after-capital deficits in excess of 23 per cent of total adjusted revenues."
This is the third time S&P has downgraded Alberta's credit rating since December 2015.
The government, in its 2017-18 budget, is projecting a $10.3-billion deficit. The debt is projected to balloon to $71.1 billion by 2019-20.
S&P forecasts the debt will reach $94 billion by 2020 because it includes guarantees and obligations under private partnerships and the total debt of Alberta Treasury Branches in its calculations.
In a written statement, Finance Minister Joe Ceci defended the government's decision to maintain services and build infrastructure.
"Our government had a choice," he said. "Had we made deep cuts that might have satisfied some bond raters, it would have resulted in a much deeper and longer recession. We take a longer-term view of Alberta's economy. That's why our measures are aimed at supporting growth, creating jobs and protecting Alberta's families.
"I believe this rating change overlooks many of the positive things happening in our province right now. Only a week ago, Moody's affirmed its existing credit rating for the province."
Wildrose finance critic Derek Fildebrandt accused Ceci of causing the downgrade through "dithering and inaction."
"Joe Ceci's response to our latest credit downgrade sounds downright sad, and desperate to shirk responsibility," Fildebrandt said on Twitter. "Time for action."
Progressive Conservative caucus leader and finance critic Ric McIver said he was concerned that higher borrowing costs and increasing debt will hurt the province's future ability to pay for public services.
"The truth is that prioritizing front-line services, while exercising restraint in non-essential areas, will not lead to deep cuts or public sector layoffs," he said in a news release. "We are disappointed to see this government continuously fail to make the tough choices Albertans sent them here to make."
