TORONTO, Jan 18 (Reuters) - Ratings agency Moody’s cut its outlook for Alberta to negative from stable on Monday while affirming its Aaa rating, in the latest indication of the strain that sinking oil prices have put on the Canadian province’s finances.
The decision came the same day oil prices slumped to a 2003 low below $28 per barrel.
The negative outlook “reflects the rising risk that the province’s fiscal position will deteriorate further than previously expected in an environment of protracted low oil prices,” the agency said in a statement.
“Without corrective fiscal action, this will lead to higher than planned fiscal deficits and lower liquidity than forecasted in the 2015/16 provincial budget.”
Alberta’s left-leaning New Democratic government in October forecast it would post a C$6.1 billion ($4.20 billion) deficit this fiscal year and borrow heavily to fund infrastructure.
Alberta Finance Minister Joe Ceci said in a statement the government will carefully manage spending to ensure deficits do not become unmanageable.
“All government spending programs are under review. There are many important priorities that will have to wait until our finances permit us to address them,” he said.
“The Government of Alberta is limiting debt to 15 percent of GDP (gross domestic product), half the average of Canadian provinces.”
($1 = 1.4538 Canadian dollars)
Reporting by Jeffrey Hodgson; Editing by Chris Reese