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Canadian Press – TORONTO — Moody’s credit rating agency changed the outlook on Ontario’s debt rating Wednesday to negative from stable, citing concerns about the province’s ability to eliminate a $12.5 billion deficit by 2017-18 as scheduled.
“After several years of weak to moderate economic growth, and higher than previously anticipated deficits projected for the next two years, the province is facing a greater challenge to return to balanced outcomes than previously anticipated,” Moody’s Investors Service said in a statement.
The change in outlook affects approximately $250 billion in debt securities, Moody’s said as it reaffirmed Ontario’s Aa2 ratings.
The ratings agency didn’t wait for the Liberals to introduce their budget July 14 before lowering the outlook to negative, but Premier Kathleen Wynne has said it will be identical to the May 1 fiscal plan that was rejected by the opposition parties, triggering the June 12 election.
“Although the province has not yet tabled a new budget following its June election, indications are that it will be little changed from the May budget, which Moody’s indicated was credit negative for the province,” said Moody’s vice president Michael Yake.
“Failure to redress the fiscal challenges would add further pressures to a debt burden that has worsened in recent years.”
Finance Minister Charles Sousa said the recently re-elected Liberal government remains committed to eliminating the $12.5 billion budget shortfall in three years, and blamed a weak economy and the federal government for the fact Ontario had to “adjust” its deficit targets for the next two years.
“Due to lower revenue growth and federal cuts to transfers, we have adjusted short-term deficit targets but remain on track to balance the budget by 2017-18,” Sousa said in a statement.
“We have cut expenses, and Ontario has become the leanest government in Canada with the lowest per-capita spending of any province.”
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