Alberta’s downgrade is a wakeup call to change course – Fraser Forum

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Alberta’s downgrade is a wakeup call to change course – Fraser Forum

by ahnationtalk on December 21, 2015239 Views

December 18, 2015

Today, Standard and Poor’s downgraded the Alberta government’s credit rating in part due to “concerns of weak budgetary performances and rising debt burden.” This remarkable development underscores just how badly Alberta’s fiscal position has deteriorated in recent years. But in many ways, this is not surprising, as the writing was on the wall.

After all, the government’s latest budget forecasts a $6.1 billion operating deficit for this fiscal year and deficits for the next three years, totalling $11.9 billion. This comes after six deficits in the past seven years.

Not long ago, in 2007/08, Alberta enjoyed a net financial asset position of $35 billion, where its financial assets exceeded the value of government debt. However, its financial position quickly deteriorated as the province started to run persistent deficits. Currently, net financial assets are projected to be just $3.4 billion.

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