Moody’s Investors Service (Moody’s) upgraded Alberta’s long-term debt rating, crediting the province’s investments in big oil for the improvement.  

The announcement from Moody’s came on Tuesday that Alberta’s long-term debt rating improved from Aa2 / (P)Aa2 from Aa3 / (P)Aa3.

Alberta’s Baseline Credit Assessment also improved from aa3 to a1.

“While Alberta continues to face volatility in revenues from oil prices, the sustained high oil prices above pre-pandemic levels have changed the fiscal trajectory of the province towards ongoing surpluses,” Moody’s report reads. 

Moody’s further said that revenue growth could become moderate in 2023 and 2024 compared to 2021 and 2022, but said it will still be enough to offset inflationary expense pressures. The investors service group projects sustained surpluses.

“The stable outlook reflects Moody’s view that the fiscal improvements from continued projected surpluses and significantly lower debt levels over the next two years will allow the province to balance the key pressures from inflation and fluctuating resource prices.”

“Much of the improvement is tied to rising non-renewable resource revenue which reflects the strong recovery in oil prices as the demand for oil surged amid global uncertainty.” 

Moody’s estimates that 30% of all revenue for 2022 and 2023 will come from oil-related revenue. 

Following this positive report for the Alberta government, New Democrat Leader Rachel Notley called for a government review of oilsands companies’ clean up policies.

Moody’s acknowledged Alberta’s Environmental, Social, and Governance (ESG) score is “moderately negative” due to environmental risks.

Last year, Premier Smith gave Albertans reprieve from high costs in 2023 as it suspended the entire fuel tax for six months — and made the fuel tax relief program permanent after that.

Under former premier Jason Kenney, the province suspended the fuel tax in the spring when gas prices rose to over $100 US per barrel. The tax was partially reinstated in October as oil prices relaxed.

Alberta Finance Minister Travis Toews announced that the entire 13 cents per litre on gasoline and diesel would be lifted beginning Jan. 1 until June.

“Alberta’s economy has recovered strongly, but Albertans are struggling to heat their homes and feed their families and we want to help. These are meaningful savings that will have a real impact on Albertans’ finances,” Toews said in a statement.

“Reducing the cost of fuel benefits all Alberta drivers. It becomes more affordable to transport goods and products, to go to work and visit loved ones, to run errands and drive children to school.”