The heavy fiscal lifting is starting to pay off for the Alberta treasury..That’s because international bond rating service DBRS Morningstar on Friday upgraded the government’s credit rating due to what it calls “increased confidence that the province’s fiscal performance can be maintained in the coming years.”.Alberta now enjoys a AA ‘stable’ rating, up from AA ‘low’ and upgraded the short-term debt rating to R-1 (high) from R-1 (middle). .Of all provinces, only British Columbia has a similar ranking which is presumably also under review..DBRS credited the re-election of the UPC government in May for moving ahead with a new fiscal framework that is starting to pay dividends. Higher energy prices also helped..And while it’s not the the highest AAA rating, it might not be long in coming if Alberta can maintain its fiscal path despite what DBRS calls “headwinds” from a slowing global economy..“Alberta’s ratings could be (further) upgraded through a combination of material improvements in economic diversification and a significant strengthening of the government’s balance sheet,” the New York-based agency said..The province’s improved fiscal and economic progress has also been recognized by other credit rating agencies. Since the start of 2023, Moody’s Investors Service and Fitch Ratings Inc. have also upgraded their respective outlooks for Alberta’s rating..What it means in the long run is lower borrowing costs as the province attempts to refinance longer term debt obligations on more favourable terms. It’s especially important given the rise in interest rates over the past year..Finance Minister and Treasury Board President Nate Horner was “pleased” with the upgrade. In a statement he described the credit rating upgrade as “another testament to our prudent fiscal management approach that is putting our province at the head of the pack.”.“Our growing population and low-tax business-friendly environment are projected to boost income tax revenue, drive job creation and enhance economic growth,” he said..But it also came with a cautionary note that now is not the time to loosen the purse strings and to continue to pay down debt, rebuild the Heritage Fund while allocating for priorities and future contingencies..“We are aware that global economic challenges such as high inflation and volatile energy prices will impact Alberta’s economic growth. That is why we have committed to increasing savings and reducing debt to secure Alberta’s future,” he said.
