Alberta’s credit rating has been downgraded by U.S.-based rating agency Standard & Poor’s (S&P) from AAA to AA+, reflecting projected “oil price-driven weak budgetary performances in the next two years” and rising debt.
Alberta Finance Minister Joe Ceci said the downgrade would have “little to no effect” on the Province’s borrowing cost.
“It would have been great to keep it (at AAA), but I had the sense that we wouldn’t be when I met with them in person,” he said. “But if you read the report, they (also) talk about the good things that Alberta is doing.”
Though the report issued by S&P calls Alberta’s economic prospects “average,” it does cite the Province’s “exceptional liquidity, very strong financial management, still strong economy” as well as “low contingent liabilities” as being positives to the rating.
“The stuff that wasn’t so great is the price of oil and how reliant our economy still is on oil and gas,” Ceci said. “That’s why, in Budget 2015, we took steps to show how we can diversify our economy.”
Olds-Didsbury-Three Hills Wildrose MLA Nathan Cooper said the downgrade should be very concerning to Albertans.
“The rating is one of the things that has made our province strong and a beacon of economic prosperity right across North America,” he said. “If we look at a very local level for the constituency, in our local communities, the credit rating was a net benefit for municipalities. It allowed them to borrow at the best available rate through the province.”
Despite the downgrade from S&P, Alberta still currently is rated as AAA by Dominion Bond Rating Service (DBRS) and Moody’s Investor Service.
“Throughout Alberta we’re doing things that are acting on some of the challenges S&P identified,” Ceci said. “(DBRS and Moody’s) have both kept us at AAA. One agency looks at some highs, the others look at other aspects. (The reports) have confirmed we’re a really stable province.”
Prior to the rating from S&P, Alberta had received an AAA credit rating from all rating agencies since 2001. The only two provinces currently rated AAA by S&P are British Columbia and Saskatchewan.
“This should be a giant red flag for the government. Everyone recognizes the government doesn’t control the price of oil, but the things that they are doing put our economy at risk,” Cooper said. “They’ve insisted on their risky economic experiments. We sure hope the government takes pause and says, ‘We need to do a much better job of riding this storm out’ prior to continuing to engage in their risk.”
