EDMONTON — Alberta's credit rating has taken another hit.
Moody's Investor Service announced today that it has downgraded Alberta's long-term debt rating to double-A1 from triple-A and has given it a negative outlook.
It's the second downgrade from a rating service since the province released its budget on April 14 that included removal of its debt ceiling and a forecast of $58 billion in debt by 2019.
Moody's says the downgrade "reflects the province's growing and unconstrained debt burden, extended timeframe back to balance, weakened liquidity, and risks surrounding the success of the province's medium-term fiscal plan given the outlook for subdued growth.''
Oil forecast too high: Moody's
It also says the province forecasts oil prices to be higher than what Moody's is predicting.
Finance Minister Joe Ceci, who is on a trip to Toronto and New York to meet with business leaders, says the downgrade is "disappointing.''
"We have the strongest balance sheet in the country and net assets of nearly $50 billion,'' Ceci said in a news release.
"The budget released last week clearly demonstrated our commitment to getting costs under control, especially in health care, by cutting spending growth to an average of two per cent over the next three years.''
Success rides on spending plan
Moody's said Alberta's success in reducing the deficit is predicated on the success of the province's spending plan and whether the anticipated forecasts for revenue improvement and oil price recovery will materialize.
"Given the lengthy period of deficits, potential for weaker economic activity and continued revenue dependence on volatile oil royalties, the negative outlook reflects Moody's view that the province's fiscal health could deteriorate further.''
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Here are some of the highlights of the Alberta 2016-17 budget. Story here: http://huff.to/1Nr7xhN
Revenue is pegged at $41.4 billion against $51.1 billion in spending. Projected revenue is down, as benchmark West Texas Intermediate oil is expected to average US$42 a barrel. If oil prices drop to $30 a barrel, the government plans to add a $700-million buffer.
Province is amalgamating 26 agencies, boards and commissions to save $33 million. Salaries and supplies for government will be cut by 2 per cent.
The only new tax is a carbon tax, that will cost households earning more than $100,00 a year about $500 annually. The new tax is part of the province's new climate change plan.
The province has created two new tax credits to encourage investment in small- and medium-sized businesses. Small-business tax will be cut to two per cent.
The government says its spending on employment incentives and capital will create about 100,000 jobs in Alberta over the next three years.