Alberta budget could affect credit optics but not rating, says Moody's

Alberta's credit rating may not be downgraded with the $6.1-billion deficit included in thebudget released Tuesdaybut the growing debtdoesn't look good to investors, says international rating agency Moody's.

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The budgetis getting a qualified thumbs down by the agency for not curtailing spending in a province that relies heavily onoil revenue at a time of lowprices.

"At current oil prices, the lack of significant expenditure controls will maintain the province's structural imbalances in the near-term and will result in a deterioration of provincial debt and liquidity metrics over the next few years, which is credit negative," saidMoody's Alberta analystKathrinHeitmannin a release.

But it's not all bad, she said, noting "current low debt burden and substantial liquidity reserves" in Albertawill allow some fiscal stimulus without a change in credit rating.

The budget has attracted its share of supporters and critics, including the decisions to empty out the province's rainy-day fund along with higher corporate taxes. The budget alsoaffirmedthe end of Alberta'sflat 10percent income tax and setthe goal ofbalancingthe books by spring 2020.