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

Just Posted

The Government of Alberta identified 115 new COVID-19 cases Sunday, bringing the provincial total to 3,089.
(Black Press file photo)
Red Deer COVID cases continue to fall

114 cases in Red Deer, down one from Saturday

File Photo
Blackfalds RCMP seeking suspects in traffic collision

RCMP are asking the public for help identifing two suspects wanted for multiple offences

Maskwacis Pride crosswalk (Left to right): Montana First Nation Councillor Reggie Rabbit, Samson Cree Nation Councillor Louise Omeasoo, Samson Cree Nation Councillor Katherine Swampy, Samson Cree Nation Councillor Shannon Buffalo, Samson Cree Nation Chief Vern Saddleback.
Pride in Maskwacis

The 4th inaugural Maskwacis Pride crosswalk painting took place on Saturday 12, 2020.

Alberta Premier Jason Kenney arrives at the 2021 budget in Edmonton on Thursday, Feb. 25, 2021.THE CANADIAN PRESS/Jason Franson
Alberta launches COVID vaccine lottery with million-dollar prizes to encourage uptake

The premier says the lottery will offer three prizes worth $1 million a piece, as well as other prizes

The City of Red Deer sits at 249 active cases of the virus, after hitting a peak of 565 active cases on Feb. 22. (Black Press file image)
Red Deer down to 119 active COVID-19 cases

Province identifies 179 new cases Saturday

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

The Kamloops Indian Residential School is photographed using a drone in Kamloops, B.C., Monday, June, 14, 2021. The remains of 215 children were discovered buried near the former school earlier this month. THE CANADIAN PRESS/Jonathan Hayward
Communities grapple with what to do with former residential and day schools

Some tear them down as a tool to help healing, others repurpose them as tools for moving forward

RCMP Const. Shelby Patton is shown in this undated handout photo. RCMP say that Patton was hit by an allegedly stolen truck that he had pulled over on Saturday morning in Wolseley, east of Regina. THE CANADIAN PRESS/HO, RCMP
Pair charged in Saskatchewan Mountie’s death make first court appearance

Const. Shelby Patton was hit by an allegedly stolen truck that he had pulled over Saturday morning

David and Collet Stephan leave for a break during an appeal hearing in Calgary on Thursday, March 9, 2017. THE CANADIAN PRESS/Todd Korol
Appeal Court rejects stay for Alberta couple facing third trial in son’s death

Pair accused in their earlier trials of not seeking medical attention for their son sooner

Calgary Stampeders’ Jerome Messam leaps over a tackle during second half CFL western semifinal football action in Calgary, Sunday, Nov. 15, 2015.THE CANADIAN PRESS/Jeff McIntosh
CFL football will be played this summer in Canada

Governors vote unanimously in favour to start the ‘21 campaign on Aug. 5

Citizenship Minister Marco Mendicino holds a press conference in Ottawa on Thursday, Nov. 12, 2020. The federal government is announcing that Indigenous people can now apply to reclaim their names on passports and other government documents. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous people can now reclaim traditional names on their passports and other ID

Announcement applies to all individuals of First Nations, Inuit and Métis background

This undated photo provided by Girl Scouts of New Mexico Trails shows a scout donating cookies to firefighters in Rio Rancho, New Mexico, as part of the Hometown Heroes program. As the coronavirus pandemic wore into the spring selling season, many Girl Scout troops nixed their traditional cookie booths for safety reasons. That resulted in millions of boxes of unsold cookies. (Girl Scouts of New Mexico Trails via AP)
Thinner Mints: Girl Scouts have millions of unsold cookies

Since majority of cookies are sold in-person, pandemic made the shortfall expected

In this artist’s sketch, Nathaniel Veltman makes a video court appearance in London, Ont., on June 10, 2021 as Justice of the Peace Robert Seneshen (top left) and lawyer Alayna Jay look on. THE CANADIAN PRESS/Alexandra Newbould
Terror charges laid against London attack suspect

Crown says Nathaniel Veltman’s four counts of first-degree murder constitute an act of terrorism

Indigenous Services Minister Marc Miller is seen during a news conference, Wednesday May 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Indigenous child-welfare battle heads to court despite calls for Ottawa to drop cases

Feds are poised to argue against two Canadian Human Rights Tribunal rulings

Most Read