PrefBlog

S&P has downgraded Alberta:

• •Alberta’s projected deficits after capex over the next two years are among the highest of rated non-U.S. local and regional governments and, absent other measures, our expectation is that this will lead to further rapid growth in the province’s debt burden.
• •As a result, we are lowering our long-term issuer credit and senior unsecured debt ratings on Alberta two notches to ‘A+’ from ‘AA’ and affirming our short-term rating at ‘A-1+’.
• •We are also lowering our senior unsecured debt rating on Alberta’s Crown Corporation, Alberta Capital Finance Authority, to ‘A+’ from ‘AA’.
• •The stable outlook reflects our expectations that Alberta will, on average, continue to post after-capital deficits of greater than 23% of total adjusted revenues in the next two years.

…
The downgrade reflects our assessment of the continued impact of depressed oil prices on Alberta’s important resource revenues and the province’s approach toward addressing its structural budget shortfall in a timeframe that is unlikely to prevent excessive growth in debt. To help stimulate the economy, the province has elevated its level of spending on infrastructure. As a result, in our fiscal 2016-2020 base-case forecast, our assessment of the province’s budgetary performance particularly on an after-capital basis has significantly deteriorated and is materially weaker compared with that of both domestic and international peers. In addition, we expect that for Alberta to fund its growing capital expenditure program, its debt burden will continue to
grow rapidly.
…
Nevertheless, we recognize that Alberta has good budgetary flexibility. Although it possesses strong tax advantages, compared with other Canadian provinces, that could be tapped, we believe it has yet to use these in a significant way to improve its fiscal position. We estimate that modifiable revenues and capital spending, on average, will represent about 84% of operating revenues and about 13% of total expenditures, respectively, for the fiscal 2016-2020 period.

Naturally, the pretend-conservatives are outraged:

Progressive Conservative caucus leader Ric McIver said Ceci and Premier Rachel Notley were oblivious to the fact they were turning Alberta’s finances into a “train wreck.”

“It’s going to be more expensive to provide services or there will be less of everything, including teachers, doctors, roads, schools, hospitals, all the things Albertans care about,” said McIver.

In news releases, Wildrose said the situation was due to the government’s “budget disaster,” while the Alberta Party chalked it up to “poor choices” by the NDP.

Hey! Pretend-conservatives! How much of the oil revenue from the past forty years is on deposit with the reserve fund?

This entry was posted on Friday, May 26th, 2017 at 10:04 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.