The Alberta government has had its credit rating dropped from AA to AA-, and its outlook has been reduced to negative, by the Fitch bond agency..It comes one day after Premier Jason Kenney revealed the government’s economic recovery plan..“The downgrade of the province’s IDR is due to Fitch’s 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,” the company said in a Tuesday afternoon statement..“As the province has neither formally detailed the extent of its current fiscal challenges nor provided firm details on a path toward an eventual recovery, the Negative Outlook reflects the risk that stressors identified in Fitch’s rating case crystalize, leading to further deterioration in credit quality.”. POLL: Many Albertans say they will ignore Christmas COVID lockdown .Fitch’s has also lowered their assessment of the province’s debt sustainability at ‘a’ from ‘aa’..“The lowering of Alberta’s debt sustainability assessment to ‘a’ reflects the sharp increase in provincial borrowing needed in the coming years to respond to the economic outfall from the pandemic and oil market downturn,” Fitch said..“The Negative Outlook is based on the potential that the risks identified in the rating case scenario are not sufficiently addressed by policy actions likely to be taken by the province through fiscal 2025, the timeframe of Fitch’s scenario. Resolution of the Negative Outlook will also take into account the context of the economic recovery in Canada and Alberta. Fitch expects that significant revisions to the province’s financial plan will be required even with a return to economic growth.”.Fitch also predicts Alberta’s deficit in fiscal 2021 will approach $20 billion; an increase from the $6.8 billion in the tabled budget. It also predicts a 7.5% decline in nominal GDP for the province. .NDP leader Rachel Notley said the downgrade was a repudiation of Premier Jason Kenney’s economic plan..“A day after the UCP released their so-called economic plan, Alberta’s credit was downgraded. Fitch cited a lack of policy action and stated “significant revisions to the province’s financial plan will be required.” Simply put, Kenney’s plan is a failure,” Notley tweeted..It is the third downgrade of the province’s finances since December, including Moody’s, then DBRS, now Fitch..The Canadian Taxpayers Federation said the downgrade should serve as a wake-up call for Kenney..“The credit downgrade signals that it’s time for the Alberta government to deal with the province’s debt and spending problem,” said Franco Terrazzano, the CTF’s Alberta Director..“It was important for the government to address its multi-billion-dollar spending problem before COVID-19 hit, and now it’s even more crucial..“Albertans are already losing billions of dollars through interest payments, so it’s important for the government to get a handle on its finances before the situation gets any worse. Struggling Alberta families and businesses can’t afford higher taxes to pay for a bloated provincial government, so the government must solve its debt problem by cutting spending.”.Dave Naylor is the News Editor of the Western Standard.dnaylor@westernstandardonline.com.TWITTER: Twitter.com/nobby7694
The Alberta government has had its credit rating dropped from AA to AA-, and its outlook has been reduced to negative, by the Fitch bond agency..It comes one day after Premier Jason Kenney revealed the government’s economic recovery plan..“The downgrade of the province’s IDR is due to Fitch’s 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,” the company said in a Tuesday afternoon statement..“As the province has neither formally detailed the extent of its current fiscal challenges nor provided firm details on a path toward an eventual recovery, the Negative Outlook reflects the risk that stressors identified in Fitch’s rating case crystalize, leading to further deterioration in credit quality.”. POLL: Many Albertans say they will ignore Christmas COVID lockdown .Fitch’s has also lowered their assessment of the province’s debt sustainability at ‘a’ from ‘aa’..“The lowering of Alberta’s debt sustainability assessment to ‘a’ reflects the sharp increase in provincial borrowing needed in the coming years to respond to the economic outfall from the pandemic and oil market downturn,” Fitch said..“The Negative Outlook is based on the potential that the risks identified in the rating case scenario are not sufficiently addressed by policy actions likely to be taken by the province through fiscal 2025, the timeframe of Fitch’s scenario. Resolution of the Negative Outlook will also take into account the context of the economic recovery in Canada and Alberta. Fitch expects that significant revisions to the province’s financial plan will be required even with a return to economic growth.”.Fitch also predicts Alberta’s deficit in fiscal 2021 will approach $20 billion; an increase from the $6.8 billion in the tabled budget. It also predicts a 7.5% decline in nominal GDP for the province. .NDP leader Rachel Notley said the downgrade was a repudiation of Premier Jason Kenney’s economic plan..“A day after the UCP released their so-called economic plan, Alberta’s credit was downgraded. Fitch cited a lack of policy action and stated “significant revisions to the province’s financial plan will be required.” Simply put, Kenney’s plan is a failure,” Notley tweeted..It is the third downgrade of the province’s finances since December, including Moody’s, then DBRS, now Fitch..The Canadian Taxpayers Federation said the downgrade should serve as a wake-up call for Kenney..“The credit downgrade signals that it’s time for the Alberta government to deal with the province’s debt and spending problem,” said Franco Terrazzano, the CTF’s Alberta Director..“It was important for the government to address its multi-billion-dollar spending problem before COVID-19 hit, and now it’s even more crucial..“Albertans are already losing billions of dollars through interest payments, so it’s important for the government to get a handle on its finances before the situation gets any worse. Struggling Alberta families and businesses can’t afford higher taxes to pay for a bloated provincial government, so the government must solve its debt problem by cutting spending.”.Dave Naylor is the News Editor of the Western Standard.dnaylor@westernstandardonline.com.TWITTER: Twitter.com/nobby7694