On the heels of downgrading Canada’s AAA sovereign rating last week, Fitch Rating is reducing Alberta’s rating to AA- from AA, citing the effects of Covid-19 on the province’s balance sheet.

Fitch said it downgraded Alberta due to “sharply higher provincial borrowing” during the current economic crisis, and the future recovery, which will raise its debt-to-GDP ratio.

The rating agency said that it expects Alberta to record a deficit of around $20 billion in fiscal 2021, up from the $6.8 billion deficit originally anticipated in the provincial budget

Fitch is also forecasting a 7.5% decline in nominal GDP for the province in 2020, followed by 4.7% growth in 2021, and 3.7% after that.

Alongside the downgrade, Fitch lowered its rating outlook on Alberta from stable to negative, citing the risk that added stressors could lead to a further deterioration in credit quality.

“The negative outlook is based on the potential that the risks identified in the rating case scenario are not sufficiently addressed by policy actions likely to be taken by the province through fiscal 2025,” it said.