In its annual report on the Province of Alberta, Moody’s Investors Service says the province’s “Aaa” rating and stable outlook reflect the success achieved under the province’s debt-reduction program and continuing prudent fiscal management, especially in budgeting for volatile oil and gas revenues.

“Given Alberta’s history of strong fiscal management and substantial financial flexibility, Moody’s anticipates a continuation of positive financial results,” says Moody’s vice president David Rubinoff, author of the report. The 2005-06 budget anticipates revenues in excess of expenses this year of $1.5 billion, before inter-fund transfers.

“Alberta’s own-source revenues remain volatile due to fluctuations in the energy sector, but the province’s Sustainability Fund smoothes out this volatility and allows for more predictable expenditure planning,” says Rubinoff.

Much better than budgeted results in 2004-05 allowed Alberta to set aside financial assets adequate to repay accumulated debt—defined by the government as direct debt less the provincially guaranteed debt of crown agencies—as it matures.

The province’s remaining tax-supported debt is mostly composed of debt issued by the Alberta Capital Finance Authority and guaranteed by the province. Alberta’s ratio of tax-supported debt to GDP measured 2.6% as of March 31, 2005, according to Moody’s.

The rating agency’s report, “Alberta 2005 Credit Analysis,” is a yearly update to the markets and is not a rating action.