There was more bad news for Alberta’s economy on Wednesday as DBRS Limited downgraded the province’s credit rating from AA (high) to AA.
The credit rating agency said the downgrade “reflects large operating deficits and rapid debt accumulation.”
DBRS has also maintained a negative trend for Alberta 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 and the lowest tax burden in the country.”
The downgrade comes one day after Alberta Finance Minister Joe Ceci released the province’s latest fiscal update, which keeps the province on track to rack up a $10.3-billion deficit this year. This year’s debt is expected to rise above $42 billion.
LISTEN: Rob Breakenridge rants about what the credit downgrade means, and why we should pay attention.
READ MORE: Alberta still facing $10.3B deficit, but signs point to rising economy
However, Ceci said there are signs the economy is rebounding and “Alberta is back in the saddle.”
The update predicts the Alberta economy will grow by four per cent in 2017 – up from the 2.6 per cent forecast in last spring’s budget. Ceci echoed remarks made by Premier Rachel Notley last week, that Alberta has added more than 70,000 full-time jobs since June 2016.
Watch below: Notley says the province has added 70,000 full-time jobs since June 2016
The finance minister said the government is committed to rein in spending, and has found $300 million towards its goal of saving $400 million this year through in-house savings.
The province is also extending by 18 months a salary freeze which began in 2016 for its management and non-union workers.
In a statement Wednesday, DBRS said it is concerned that the province’s plan to return to balance “relies on a recovery in resource revenues, rather than fundamental adjustments to the budget.
“As a result, debt will continue to rise and there is no clarity as to when the credit profile will stabilize.
“DBRS believes that proposed expense measures will be insufficient to meaningfully address the fiscal imbalance.”
The trend could be adjusted to stable, DBRS said, if the province “were to introduce a credible plan that resulted in the debt-to-GDP ratio stabilizing around the levels currently expected.”
READ MORE: Balanced budget equals layoffs, says Premier Rachel Notley
Credit ratings affect how much governments pay to borrow money. Ceci and Notley have said they plan to balance the budget by 2023.
With files from Joe McFarland, News Talk 770 and The Canadian Press.