AB Pol Econ

Another Downgrade from Moody’s: Aa2 to Aa3

4Oct

By Bob AscahNo Comments

Agencies, ATB, Credit Ratings

Another Downgrade from Moody’s: Aa2 to Aa3

Analysis and Opinion On 2 October 2020, Moody's Investors Service downgraded the Province's debt to Aa3 from Aa2 while revising the outlook to Stable from Rating under Review. The short report and review was initiated on 31 August 2020 shortly after the provincial government's skeletal First Quarter Fiscal Update. The downgrade leaves Alberta one notch above the single A rating category. Downgrades in theory mean the borrower will have to pay higher rates of interest on its debt. The downgrade was expected and gave a balanced view on the fiscal picture acknowledging the province's strong liquidity position and the province's fiscal capacity to "enact additional tax measures to support revenue growth, which nevertheless the provincial governments have been reluctant to fully use in recent y...

8Sep

By Bob AscahNo Comments

Agencies, Budget, Energy, Government Finances, Politics, Uncategorized

After waiting an extra 2 months 2019-20- some major surprises missed in February forecast

Updated 10 November 2020 In an earlier report on the crucial role played by the Alberta Petroleum Marketing Commission (APMC) in government finances, we highlighted the Commission's role in overseeing the North West Redwater Upgrader investment, commenced in the latter years of the Stelmach regime. We raised some doubts, given APMC's record with the North West Redwater Partnership (NWRP), about its competence in negotiating with TC Energy on the Keystone XL project. APMC is also the agency tasked with negotiating the Energy East commitment and the controversial oil-by rail contracts. With the two-month delay in the publication of the Government of Alberta's Annual Report and audited consolidated financial statements, the public finally has been apprised that Alberta's budget shortfal...

31Aug

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances

“Triple Black Swan Event”

Themes from the press conference "No credible date for rebalance" "Doing everything we can to encourage economic growth and development" "Stay tuned for Budget 21-22" "We can no longer afford to be an outlier" "This is not a time to be talking about raising taxes." A focus on delivering public services more efficiently and growing the economy. "Important for Albertans to have a discussion about revenue structure" Albertans will continue to be "self responsible" "We will be very reluctant to shut down the economy" Finance Minister and Treasury Board President Travis Toews presented the UCP government's much anticipated Fiscal Update on Thursday, 27 August. The thin 20-page document was much less substantive than I expected. At his press conference, the Minister presented both the govern...

26Aug

By Bob AscahNo Comments

Budget, Credit Ratings, Government Finances, Politics

Fiscal Update- August 2020

It appears our UCP friends have left it to the last moment to drop the fiscal update and financial accounts on the Opposition NDP who will debate the documents tomorrow.. It could be cynicism or it could be the UCP Cabinet and Caucus still have not agreed among themselves how to position the past year's financial accounts- blaming the NDP- or how do we preach fiscal austerity in a sea of red ink, and how do you budget credibly to a balanced budget in 22-23 or 23-24? How can you make the numbers add up, even with glowing expectations of energy and other investment pouring into the province? The latter point may not be seen as credible by the rating agencies. In reality for the next two years, Alberta, will be a net taker from Confederation, not leading the country in economic growth and dr...

24Aug

By Bob AscahNo Comments

Agencies, ATB

ATB quietly reports another losing quarter- Analysis and Opinion

Curtis Stange, ATB President and CEO Source ATB.com On Thursday 13 August, ATB Financial issued its financial results for its quarter ending 30 June 2020. The rosy press release "Supporting Alberta's economic recovery" acknowledged the "triple impact event" of COVID--19, oil price shock, and market volatility, while affirming the results "demonstrate its financial strength while supporting customers." Buried in the news release was the fact that ATB had lost $114 million in the quarter driven mainly by another $245 million provision for loan loss. This is the second consecutive quarterly loss for ATB which lost $93 million in the previous quarter. Not to be deterred by persistent negative news, the release boasted: In the first quarter, ATB delivered solid operating revenue of $424.6 m...

1981- Economic Downturn and Accelerated Projects

16Aug

By Bob AscahNo Comments

Capital Spending, Energy, Fiscal History, Government Finances

1981- Economic Downturn and Accelerated Projects

The fall and winter of 1980-81 was a very unsettling time for provincial politicians. The Alberta public, politicians, and senior public servants were furious at the indifference of federal politicians' plans to redirect oil revenues from producers and the provincial government. Unemployment insurance claims rose from about 10,000 in September 1980 to over 17,000 in January 1981. Alberta's unemployment rate increased from 3.4 per cent in September to 4.5 per cent in January, further causing concern in a province which had recorded rapid economic growth since the early 1970s. In this climate of uncertainty, Treasurer Lou Hyndman had requested his cabinet colleagues to provide suggestions on how to get idle human and physical capital to work again. In these two memoranda from the Hyndman pap...

Budget 1981-82: Communications objectives

9Aug

By Bob AscahNo Comments

Budget, Capital Spending

Budget 1981-82: Communications objectives

The April 1981 was a pivotal budget for the Province of Alberta. Every budget has key communications objectives, as Lou Hyndman's one-page memorandum to his Treasury Board and cabinet colleagues, reveals. This budget was Alberta's first after the National Energy Program was announced. As last week's Abopecon.ca reported, the previous month, the Treasury department was wary about providing any economic forecasts and the prevailing mood in the provincial government and the whole economy was grim. The situation back in 1981 is analogous to the circumstances facing the current government. For the Conservative government, re-elected for the third time in 1979 with 74 of 79 seats, it was clear that the government would use its considerable fiscal resources to maintain public services an...

Hyndman Papers- Budget 1981 preparations

31Jul

By Bob AscahNo Comments

Budget, Economic Data, Government Finances

Hyndman Papers- Budget 1981 preparations

After the National Energy Program was announced, Alberta was about to enter a period of recession that would shape fiscal policy for over the next four decades. As this excerpt from a January 1981 memorandum from Deputy Provincial Treasurer A.F. (Chip) Collins reveals, the province's budget-makers faced a climate of great uncertainty. Over the coming months, Abpolecon.ca will be reporting the internal discussions, at the highest levels of the Alberta government, respecting economic activity and proposed budgetary measures. This tumultuous period offers interesting parallels to what Treasury Board and Finance budget-makers are dealing with. As this excerpt from Provincial Treasurer Lou Hyndman's files illustrates, 1981 was turning into annus horribilis. As the Treasury department prepar...

Hyndman Papers- -NEP “Casualty Reports” January 1981

27Jul

By Bob Ascah1 Comment

Employment, Energy

Hyndman Papers- -NEP “Casualty Reports” January 1981

The following paper comes out of Treasurer Lou Hyndman's files from January 1981 - about 80 days after the National Energy Program was announced. The document originates from the Canadian Association of Oil Drilling Contractors (C.A.O.D.C.). The document is a list of rigs idled and jobs lost and projected jobs lost in the oil patch. The language is fairly neutral but the term "casualty list" conveys a great deal of worry within the oil servicing industry. Also the time since the NEP is locked in people's memory as a term like Anno Domine (A.D.). This usage highlights a sense of an oilpatch entering into a totally different world. Bulletin C.A.O.D.C. Casualty Report NO.2 Issued 1981 January 05 (NEP +69) Since the publication of the National Energy Program on 1980 October 28 (NEP Day) t...

20Jul

By Bob AscahNo Comments

Agencies, Financial Institutions, Opinion/Research

AIMCo’s Board reports

Updated 21 July 2020 On 9 July AIMCo's board of directors issued a summary of results of its own review of the "VOLTS investment strategy." VOLTS stands for Volatility Trading Strategy. The seven page summary report, dated 30 June, was posted on AMICo's website. Board's mandate Three priorities, set by the Board during its 14 May announcement, were to: limit the damage from the volatility trading strategy; confirm that no other investment strategies could generate substantial losses in very unusual circumstances; and undertake a comprehensive review of the volatility trading strategy to identify lessons learned and corresponding enhancements to AIMCo’s investment and risk management processes....(to) be shared with AIMCo’s clients and shareholder with a target completion of mid-June."...