Moody's Downgrades Alberta Credit Rating; Overdependence On Oil & Gas Industry Among Main Reasions

Womp womp!

Alberta's credit rating has been downgraded by Moody's, with the agency citing the volatility in the province's dependence on oil and continued fiscal pressures. The province's rating was downgraded to Aa2 stable from Aa1 negative on Tuesday.

The downgrade, the agency states, reflects Moody's "opinion of a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources … and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently with no near-term expectation of a significant rebound in oil-related investments."

The agency's rating stated that continued spending cuts will be needed for the government to balance the budget by its set target of 2022.

"Moody's notes that the province's forecast of a cumulative three per cent decline in operating expenses by 2022-23 is somewhat ambitious which will require sustained political discipline," the release read. "Macroeconomic factors, which influence oil-related revenue growth and private sector investments in the oil sector, remain outside the control of the government. As a result, the government's fiscal projections are subject to material execution risk."

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https://www.cbc.ca/news/canada/calgary/moody-s-alberta-credit-rating-1.5383294