EDMONTON, AB: Wednesday, credit rating agency DBRS Limited downgraded the Government of Alberta’s credit rating, following the release of the NDP’s Second Quarter Fiscal Update. Under previous governments, Alberta benefited from top notch credit ratings but has now seen six credit downgrades in just over two years.
In a news release issued (Wednesday morning), DBRS writes that the “downgrade reflects large operating deficits and rapid debt accumulation… DBRS has maintained the Negative trend because the Province has yet to demonstrate any real willingness to address the weakest budget outlook among all provinces, despite high levels of per capita spending.”
“There’s no question that this ideological NDP is destroying Alberta’s historically strong reputation. From debt free not long ago to today having no real prospect of returning to a balanced budget, Alberta is at increasing risk of becoming a fiscal basket case. With each downgrade, the cost to borrow gets more expensive. Yet, the NDP continues to borrow money it doesn’t have. It’s madness, and Albertans are on the hook for the NDP’s reckless ways,” said UCP Finance Critic Drew Barnes.
Credit rating agencies like DBRS continually monitor the fiscal performance of provincial governments to assess risk. When a province is identified as a risky borrower, lenders increase their interest rates to account for that risk. According to DBRS, “Alberta’s fiscal outlook remains the weakest among all Provinces and risks remain tilted to the downside.”
“These numbers are staggering. Alberta’s debt-to-GDP ratio is skyrocketing. By 2020, DBRS expects that our debt-to-GDP ratio will hit 24 per cent,” said Barnes. “Next year, Albertans will be paying $1.4 billion just to service our debt. That’s $1.4 billion not going towards frontline services for hard-working Albertans and their families. Alberta’s fiscal house is on fire, yet the NDP Finance Minister often seems more concerned with brewery tours. He’s clearly unqualified to clean up his own fiscal mess.”
DBRS’ report follows an earlier prediction by Standard and Poor’s which estimated that Alberta would reach $94 billion in debt by the end of 2020.