Stock Price Decline Leads To $1 Billion Reduction Of Alberta's Rainy Day Funds

October 15, 2008 12:53 p.m. EST

Edmonton, Alberta (AHN) - Alberta's Heritage Savings Trust Fund is down to $16 billion as of June, reduced by $1 billion due to the dip in share prices.

Alberta Finance Minister Iris Evans disclosed the information Tuesday to the provincial legislature to explain the 6 percent drop in value of its rainy day fund. "That's a paper loss, it does not translate into an immediate loss," Evans said, quoted by the Canadian Press.

According to economist Mike Percy, the 6 percent loss is considered a remarkable feat since shares in the Toronto and Dow stock exchanges tumbled down by 30 to 35 percent after the global credit crunch hit hard the U.S. and Europe.

Percy, also dean of the University of Alberta's business school, theorized the province's heritage savings trust fund must have a well diversified portfolio to reduce its loss to a minimum.

Alberta Premier Ed Stelmach attributed this development to the province's preparation to weather the financial storm hitting the globe. Stelmach said last week he wanted to meet with other Canadian premiers to tackle economic issues confronting the nation's provinces.