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Transport truck driving past an oil pump in Alberta. (Getty Images via NewsCred)

Premier of oil-rich Alberta says cuts needed, credit rating at risk

TORONTO – The oil-rich Canadian province of Alberta will spend its C$6 billion ($4.79 billion) contingency fund in six months and risk its credit rating unless it moves quickly to shore up its finances, Alberta Premier Jim Prentice said in an interview with the Globe and Mail newspaper.

Prentice told the Globe that the province, the largest exporter of oil to the United States, will seek concessions from public-sector workers and take other measures to strengthen his fiscal position. He ruled out implementing a sales tax. Alberta is the only Canadian province without a sales tax.

Dropping oil prices have bit into the revenue of the Alberta government, which relies on payments and royalties from the oil and gas sector to fund nearly a third of its budget.

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Unless the province cuts spending and boosts revenue, Prentice said, it will spend both its contingency fund and the nearly C$16 billion in its rainy-day Heritage Fund, which holds a portion of past oil and gas revenues, in less than three years.

“Along the way we’ll lose our triple-A credit rating … and we’ll have basically destroyed all of the savings that Alberta took 50 years to accumulate and we’ll be back into racking up debt,” he said in the interview. “That is not happening on my watch.”

Prentice, a former investment banker and federal cabinet minister who took over as Alberta’s premier in September, said in January that the province expected a C$500 million budget deficit in the fiscal year to March 31.

($1=$1.25 Canadian)

(Reporting by Allison Martell; Editing by Jeffrey Hodgson and Peter Galloway)

This article was from Reuters and was legally licensed through the NewsCred publisher network.