Alberta budget could affect credit optics but not rating, says Moody's

Alberta's credit rating may not be downgraded with the $6.1-billion deficit included in the budget released Tuesday but the growing debt doesn't look good to investors, says international rating agency Moody's.

Ratings agency raises concerns over deficit but notes Alberta has 'current low debt burden'

Alberta Finance Minister Joe Ceci tabled the 2015 provincial budget on Tuesday. (Topher Seguin/Canadian Press )

Alberta's credit rating may not be downgraded with the $6.1-billion deficit included in the budget released Tuesday but the growing debt doesn't look good to investors, says international rating agency Moody's. 

The budget is getting a qualified thumbs down by the agency for not curtailing spending in a province that relies heavily on oil revenue at a time of low prices.

"At current oil prices, the lack of significant expenditure controls will maintain the province's structural imbalances in the near-term and will result in a deterioration of provincial debt and liquidity metrics over the next few years, which is credit negative," said Moody's Alberta analyst Kathrin Heitmann in a release.

But it's not all bad, she said, noting "current low debt burden and substantial liquidity reserves" in Alberta will allow some fiscal stimulus without a change in credit rating.

The budget has attracted its share of supporters and critics, including the decisions to empty out the province's rainy-day fund along with higher corporate taxes. The budget also affirmed the end of Alberta's flat 10 per cent income tax and set the goal of balancing the books by spring 2020.


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