DEBT DOWNGRADE? Alberta’s Dangerous Budget Puts Credit Rating At Risk

The latest budget put forth by the Alberta NDP could raise the risk of a debt downgrade, as credit rating agencies issue warnings on rising debt levels.

According to the Financial Post, Moody’s Investor Service issued a warning on Friday saying they are reviewing Alberta’s credit rating. The move came after the NDP issued their budget.

Said Moody’s, “Alberta’s rapidly rising debt burden, protracted deficits and above-inflation expense growth continue to put significant pressure on its rating.”

DBRS Ltd issued similar warnings, saying Alberta’s current credit rating may not be justified, “in the absence of meaningful action to address the budget deficit and slow debt growth.”

The key concern is the $38 billion increase to the debt that is projected over the next three years. This is made even worse by the NDP banking on stronger oil revenues to close the budget gap – something that cannot be relied upon.

The budget deficit for the upcoming year is expected to be $10.3 billion.

The debt-to-GDP ratio will also explode to 19.5% in 2020, a near doubling from current levels.

Strangely, despite the credit rating agencies growing concerns, Alberta Premier Rachel Notley said the debt was “absolutely manageable,” when asked about Albertans growing worry over the ballooning red-ink.

Big Government = Big Debt

It’s no surprise that Alberta is drowning in debt with no end in sight. The NDP is a big-government party. While it used to at least focus more on supporting workers, it has now moved further towards an agenda that stifles all industries and damages business investment – which makes everyone poorer. It takes more and more from the taxpayers, enriching the government sector beyond any reasonable means.

This big-government approach will result in big-debt, and all Albertans will pay the price. A lower credit rating will mean higher debt-servicing costs. That means less money for roads, police, hospitals, schools, and everything else a province needs. It also means higher taxes just to cover the costs of the debt.

All in all, this will leave Albertans paying more and getting less. That should be reason enough to end the NDP experiment after a single term.

Spencer Fernando

Photo – Twitter

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