CTF: Credit downgrade signals Alberta government needs to fix debt problem
CALGARY, AB: The Canadian Taxpayers Federation is calling on the Alberta government to cut spending in light of the province’s credit downgrade from bond rating agency S&P Global.
“The downgrade is a clear signal that it’s time for Premier Jason Kenney to take the province’s debt problem serious and find savings,” said Franco Terrazzano, Alberta Director for the CTF. “The Blue Ribbon Panel made it clear that Alberta has a huge spending problem, but so far we’ve seen a lack of effort from this government to find savings.”
S&P Global downgraded the province’s credit score to A from A+. Credit rating downgrades can push up interest charges when governments borrow money.
“Alberta’s operating and after-capital deficits, which are the largest of any local and regional government in the country this fiscal year and last, caused us to lower the stand-alone credit profile by one notch,” states S&P’s credit report.
Budget 2021 projects the Alberta government’s debt to reach $116 billion by the end of the fiscal year, with interest payments costing $2.8 billion. Total government spending will reach $61.9 billion this year. For comparison, total spending before this administration took over was $56.3 billion in 2018-19.
“It was important for the government to find savings before COVID-19, and it’s even more important now that the government’s debt has passed the $100-billion mark,” said Terrazzano. “The credit agency singles out the big deficit and that’s a problem this government needs to take very seriously.”
The Alberta government would spend $10 billion less every year if its per-person spending were in line with costs in provinces such as British Columbia, Ontario and Quebec, according to the Blue Ribbon Panel on Alberta’s finances.
“Albertans are already losing billions of dollars to pay interest charges on the debt so it’s important for the government to get a handle on the situation before things get any worse,” said Terrazzano. “Families and businesses can’t afford higher taxes, so Kenney needs to find savings to address the $100-billion debt problem.”