With economic recovery uncertain, and many of the provinces’ finances in shaky shape, their credit rating outlook for 2015 continues to be negative, says Moody’s Investors Service.

In a new report, the rating agency indicates that the ongoing economic uncertainty, coupled with the risk that efforts to improve provincial balance sheets may not be successful, are keeping its outlook on the provinces negative. Moody’s says it expects most provinces to remain in deficit in 2015. And, it says that the governments that are working towards a return to balance over the next few years, could still have their efforts derailed.

“The underlying driver of the negative outlook is the modest growth Moody’s expects for Canada overall in 2015,” it says; noting that it expects growth of between 2%-3% in both 2015 and 2016, with risks to the downside, due to the recent decline in oil prices, and the uncertain global economic recovery.

Additionally, it notes that provincial debt burdens continue to rise. “An increase in interest rates from current low levels would add fiscal pressure given their rising debt burdens,” says Michael Yake, vice president and senior analyst at Moody’s.

In a separate report, Moody’s says that Alberta and Saskatchewan “both have the financial reserves and minimal debt necessary to have their credit quality ride through a prolonged decline in oil prices.” Both provinces still carry Moody’s highest rating, Aaa, with stable outlooks.

Due to their contingency accounts, low debt levels, and prudent budgetary practices, Moody’s says that it views Alberta and Saskatchewan to be in a strong position to withstand future fiscal pressure stemming from depressed oil prices. Although, it notes that preserving a healthy level of financial assets will be a key challenge for both provinces amid rising spending pressure.

“While both provinces have financial assets that far exceed the average for the Canadian provinces, Alberta’s financial assets, at more than three times the amount of its debt and covering 75% of annual consolidated expenditures, provide a substantial buffer should there be a protracted decline in oil prices”, says Moody’s assistant vice president and analyst, Kathrin Heitmann.