Alberta's credit rating has been downgraded from Aa1 negative to Aa2 stable by Moody's Investors Service ("Moody's"), who cited the volatility in the province's dependence on oil and continued fiscal pressures as reasons for the downgrade.

According to the report on CBC News, Moody’s says the downgrade, reflects the agency's "opinion of a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources … and remains pressured by a lack of sufficient pipeline capacity to transport oil efficiently with no near-term expectation of a significant rebound in oil-related investments."

According toMoody s Press Release, sustained spending cuts will be required if the government is to balance the budget by its set target of 2022."Moody's notes that the province's forecast of a cumulative three percent decline in operating expenses by 2022-23 is somewhat ambitious which will require sustained political discipline," the report reads.

"Macroeconomic factors, which influence oil-related revenue growth and private sector investments in the oil sector, remain outside the control of the government. As a result, the government's fiscal projections are subject to material execution risk."

The report also mentions the presence of environmental risk, as a major concern.

"Alberta's oil and gas sector is carbon-intensive and Alberta's greenhouse gas emissions are the highest among provinces. Alberta is also susceptible to natural disasters including wildfires and floods which could lead to significant mitigation costs by the province," the report states.

Duane Bratt, a political science professor at Mount Royal University in Calgary, quoted on CBC News,believes that the downgrade iscaused by signals that have indicated that the government is ramping up for a labour battle. The signals include unions being told to expect thousands of public sector job cuts.

"That's basically saying, 'We've seen your budget plan. We see what you want to do. We see the confrontation you're about to have with unions to deal with those wage pressures.' They're not sure that the government is going to go through with it or not. I think the government is going to go through with it," Bratt said.

Alberta Finance Minister Travis Toews, blamed the rating on the NDP government, noting how disappointed he was by the situation.

"We've got a premier that's doing everything he can to advance the cause of additional pipeline access. Unfortunately, the previous government did not get a lot done in that area, and we won't make that mistake," he told reporters on Wednesday.

In response to this, Brattsays it is typical with a downgrade, for governments to point to one factor and blame this factor the downgrade. In this case, the factor is the NDP government.

"In particular, this government just simply said, 'well, it's the NDP's fault, they put us in a large deficit situation and we're trying to claw a way out and we haven't done it yet,'" Bratt said. "The problem with that argument is the UCP already had an opportunity at producing a budget and it obviously did not impress Moody's because the deficit went higher than the previous."

NDP Leader Rachel Notleyrecently responded to this accusation, she said,

"When we were in government, we saw the price of oil go down $80 per barrel. The price of oil has been stable since Jason Kenney's been premier. This downgrade has been entirely self-inflicted."