Fitch reduces Alberta credit rating, cites concerns on heavy borrowing

Fitch reduces Alberta credit rating, cites concerns on heavy borrowing

EDMONTON — Alberta’s plan to relaunch its economy is taking a hit right out of the starting gate.

The United States-based Fitch rating agency has announced it’s reducing Alberta’s credit rating to AA- from AA.

Fitch cites a concern with sharply higher borrowing done by the province to deal with the economic fallout of the COVID-19 pandemic.

Premier Jason Kenney is expected to provide details of Alberta’s financial picture in August, but has said this year’s budget deficit is expected to balloon to about $20 billion from $7 billion.

On Monday, the premier announced an extra $1 billion in infrastructure spending on top of about another $9 billion in existing commitments to build roads, schools and health-care facilities to boost short-term employment.

His United Conservative government is also accelerating a cut to corporate income taxes, bringing the rate to eight per cent this week, in the hopes of attracting businesses to a province that has been hit by both the pandemic and a global oil price war.

Fitch, in a news release Tuesday, said the rating drop is due to the “expectation that sharply higher provincial borrowing during the pandemic-driven economic crisis and in the recovery to follow will result in a debt burden relative to GDP that is incompatible with an AA rating.”

Alberta Finance Minister Travis Toews responded to the downgrade in a statement, noting that Fitch takes into account the financial pressures facing Alberta.

“In response to the ongoing crisis, we have announced a number of stimulus and support measures,” said Toews.

“The plan will attract investment creating jobs that get people back to work, build essential infrastructure and diversify the economy. This plan will position the province for a sustainable and expedited economic recovery.”

Opposition NDP Leader Rachel Notley has said the infrastructure spending will work as a short-term “shock absorber” to the job market. But she said cutting corporate taxes didn’t bring in jobs before the pandemic and a further cutting won’t help after the crisis abates.

“Simply put, Kenney’s plan is a failure,” Notley wrote on Twitter.

This report by The Canadian Press was fist published June 30, 2020

Dean Bennett, The Canadian Press

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer up to 4 active COVID-19 cases

Province announced 77 new confirmed cases across Alberta Friday

Samson chief election set for July 14

Nine candidates, including the incumbent, running

46 new COVID-19 cases reported Wednesday in Alberta

Province has completed more than 500,000 COVID-19 tests

PODCAST: COVID-19 and the US Election

The Expert welcomes Burman University Political Scientist Marc Froese

PODCAST: COVID-19 and the US Election

The Expert welcomes Burman University Political Scientist Marc Froese

Sylvan Lake RCMP continue search for missing man

43-year-old Steven Hull’s last known whereabouts were in the Sylvan Lake area on May 28

After lobbying, Catholic Church won $1.4B in virus aid

Faith-based organizations aren’t usually eligible for money

Supreme Court to rule on constitutionality of genetic discrimination law

Canadian Coalition for Genetic Fairness challenges ruling

Racist slurs during Conservative leadership debate not surprising: Lewis

Racist slurs during Conservative leadership debate not surprising: Lewis

‘These kind of issues are out here’: New doc examines police violence in Calgary

‘These kind of issues are out here’: New doc examines police violence in Calgary

Most Read