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

Alberta chief medical officer of health Dr. Deena Hinshaw said the province still hopes to bring the hospitalization number down before relaxing restrictions. (photography by Chris Schwarz/Government of Alberta)
14 new deaths, 366 new COVID-19 cases in Alberta

Province nearing 100K COVID-19 vaccine doses administered

The first pages of the book, by Kristy Walker.
Sylvan Lake author pens first children’s book about COVID-19

“The Coronavirus Isn’t Scary” by Kristy Walker teaches children to take care of themselves

Minister of Agriculture and Forestry, MLA Innisfail-Sylvan Lake, Devin Dreeshen. (Photo Submitted)
Ag Minister announces 20% off crop insurance for Alberta farmers

Dreeshen says this will support job creators and boosting rural economy during a difficult time

An x-ray tech demonstrates the new equipment in use. (Photo Submitted)
New diagnostic equipment now operational at Sylvan Lake AACS

In August it was announced that Stephen and Jacqueline Wuori donated $850,000 to AACS

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

(Photo submitted)
Central Alberta researchers recognized for studies in agricultural sciences

Jessica Sperber of Ponoka and David MacTaggart of Lacombe awarded prestigious scholarship

FILE – Canadian Prime Minister Justin Trudeau delivers his opening remarks at a news conference outside Rideau cottage in Ottawa, Tuesday, January 19, 2021. THE CANADIAN PRESS/Adrian Wyld
Vaccine CEO ‘very, very clear’ that Canada’s contracts will be honoured: Trudeau

Trudeau says he spoke to Moderna CEO on the morning of Jan. 26

A ground worker wearing a face mask to curb the spread of COVID-19 unloads lobsters from a WestJet Airlines flight at Vancouver International Airport, in Richmond, B.C., on Thursday, January 21, 2021. THE CANADIAN PRESS/Darryl Dyck
Trudeau teases stricter travel measures; Canadians flying to U.S. now need COVID test

Prime minister says measures need to not hurt imports and essential trade

(Photo submitted)
Ponoka RCMP receives new police puppy trainee

Detachment says goodbye to ‘Maja’ and welcomes ‘Neutron’

Art Kempf, originally from the Stettler area but now living in Lacombe, is pictured here with his late wife Lillian. Art’s 100th birthday is coming up on Feb. 22nd.
photo submitted
Former Stettler area resident Art Kempf will be celebrating a very special day next month

Kempf, now a Lacombe resident, marks his 100th birthday on Feb. 22nd

Whistle Stop Cafe owner Christopher Scott and his sister Melodie are serving sit-down customers in their Mirror diner to protest health restrictions that they say are unfair to restaurants and other small businesses. (Photo by Paul Cowley/Advocate staff)
Central Alberta restaurant owner defies health restrictions by serving diners

Whistle Stop Cafe owner says pandemic restrictions unfair to restaurants and small businesses

The Northwest Territories flag flies on a flagpole in Ottawa on July 6, 2020. THE CANADIAN PRESS/Adrian Wyld
Alberta man charged with threatening Northwest Territories public health officer

Police did reveal the nature of the threats, but said it was concerning

A healthy volunteer receives an injection in this undated handout image provided by Providence Therapeutics. Human clinical trials have begun in Toronto for a proposed COVID-19 vaccine by a Canadian company. Providence Therapeutics of Calgary says 60 subjects will be monitored for 13 months, with the first results expected next month. THE CANADIAN PRESS/HO-Providence Therapeutics
*MANDATORY CREDIT*
Calgary company begins human clinical trials for its COVID-19 vaccine candidate

If successful, the vaccine could be released by the end of the year

Most Read