The Province of Alberta has received a modest improvement in its credit score.
Credit rating agency DBRS Morningstar announced increases to both Alberta’s long-term and short-term debt ratings in a release on Sept. 14.
DBRS Morningstar upgraded Alberta’s long-term debt rating to AA from AA(low) and upgraded the short-term debt rating to R-1(high) from R-1(middle) while also adjusting rating trends to stable from positive.
“We are pleased with DBRS Morningstar’s decision to upgrade Alberta’s issuer rating and long-term debt rating to AA with a stable trend from AA (low) with a positive trend,” said Nate Horner, Alberta’s minister of finance and MLA for Drumheller-Stettler, in a media release.
“This credit rating upgrade is another testament to our prudent fiscal management approach that is putting our province at the head of the pack.”
According to the DBRS Morningstar release, Alberta’s debt-to-GDP (Gross Domestic Product) ratio will remain hovering around the 18 per cent mark in 2023-24 based on Horner’s previous first-quarter update.
SEE ALSO: Alta. finance minister gives quarterly update
“Alberta has the lowest net debt-to-GDP ratio in Canada and DBRS Morningstar projects that Alberta’s ratio is expected to remain stable,” continued Horner.
“The province’s improved fiscal and economic progress has also been recognized by other credit rating agencies. Since the beginning of 2023, Moody’s Investors Service upgraded its credit rating for Alberta and Fitch Ratings Inc. has upgraded its outlook for Alberta’s rating.”
Partially driving the rating increase is Alberta’s current strength in the energy sector; the province experienced GDP growth of just over five per cent in 2022, some of the highest in the country according to the DBRS Morningstar release.
While that strong growth is not expected to be maintained, forecasts still show the province’s GDP growth remaining around the three per cent mark in 2023.
When considering factors for a province’s credit rating, organizations like DBRS Morningstar look at a multitude of factors including economic diversity, population growth, environmental factors such as emissions and effluents, and social and governance issues.
“Our growing population and low-tax business-friendly environment are projected to boost income tax revenue, drive job creation and enhance economic growth,” said Horner.
“We are aware that global economic challenges such as high inflation and volatile energy prices will impact Alberta’s economic growth. That is why we have committed to increasing savings and reducing debt to secure Alberta’s future. Through our new fiscal framework, we will continue to manage Alberta’s finances responsibly while still meeting Albertans’ needs both today and well into the future.”
