Alberta unlikely to balance books in 2013-14-Moody's

Thu Jan 31, 2013 2:11pm EST
 
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* Agency says books may not balance for another year

* 2013-14 deficit could hit C$4 billion

* Redford has not yet ruled out deficit elimination

By Jeffrey Jones

CALGARY, Alberta, Jan 31 (Reuters) - Moody's Investors Service forecast something on Thursday that Alberta's premier will not yet admit - that a projected C$6 billion ($6 billion) shortfall in oil revenue will likely force the Canadian province to miss its target of balancing the books this year.

Premier Alison Redford has said an unusually deep discount on the price of heavy crude from Alberta's oil sands is forcing her Progressive Conservative government to consider tough cost-saving moves for its 2013-14 budget, due on March 7.

In a report on Thursday, Moody's, the influential credit-rating agency, said Alberta's finances are becoming more strained with the price spread between its Western Canada Select heavy crude and U.S. benchmark West Texas Intermediate remaining wide. Energy revenues make up nearly a third of the province's total.

"The projected continued decline in resource revenues and the province's significant reliance on these revenues are credit negative and will likely mean Alberta will need to extend its time frame back to budget balance past 2013-14," Moody's analyst Jennifer Wong wrote.

Alberta has already warned that its deficit for the current fiscal year, ending March 31, could be triple the C$886 million it forecast initially. Deeply discounted crude is blamed on a combination of growing production, increasing competing supplies in the United States and limited pipeline capacity.   Continued...