Canadian provinces may miss their short-term budget targets because of lower oil prices, though balance is expected long term, Moody's said.

The provincial government in Alberta introduced a new budget last month that aims to reduce the provincial reliance on non-renewable resources. With lower crude oil prices and decreased exports to the United States, provincial Finance Minister Joe Ceci stressed the government can't be reckless during the market downturn.

A research note published Monday from Moody's Investors Service said provincial budgets in Canada may be squeezed by lower crude oil prices.

"More Canadian provinces may miss their 2015-16 budget targets because of weaker than expected economic growth and resulting lower tax revenues," the firm said.

A salary freeze for Cabinet ministers and hiring restraint across the public service spectrum in Alberta is one of the ways in which the oil-rich province aims to balance its budget without "reckless cuts."

Last week, Royal Dutch Shell said an uncertain market and the lack of infrastructure needed to move Canadian oil to the global market means it's time to cancel its Carmon Creek oil project in Alberta and take a $2 billion write down for the loss.

Sanctioned in 2013, the company said it had moved in early 2015 to retool construction operations at the oil sands project, which was expected to yield 80,000 barrels of oil per day.

Despite the short-term slump, Moody's said it expected the Canadian market would emerge relatively unscathed from the downturn.

"While oil producing provinces continue to face deep deficits due to a fall in oil royalties, we see no change in the long-term trend toward balanced budgets and stable debts for the sector overall," it said.