A pair of credit rating agencies have lowered their ratings for the province of British Columbia in recent weeks, citing pandemic-induced deficits and the resulting rise in long-term debt as reasons for the this decision.
S&P Global Ratings announced its change on Wednesday, lowering the provincial score from AAA to AA+. Fitch Ratings made a similar move on June 25.
“The rating action reflects Fitch’s expectations that the province’s debt burden will increase significantly over the next several years as it addresses the economic and fiscal disruption caused by the pandemic,” Fitch wrote. agency in its update.
Fitch also cited the “rapid increase” in federal government borrowing during the pandemic as a factor weighing on its BC rating.
Both Fitch and S&P called their outlook for the province “stable” and said they expect B.C.’s finances to improve as COVID-19 vaccination rates improve. increase and economic conditions return to normal.
S&P, however, notes in its “downside scenario” that a weaker-than-expected economy or large and sustained deficits could lead to a further downgrade in BC’s credit rating.
“We could revise the outlook to negative or downgrade the ratings over the next two years if a resumption of weaker economic conditions or poor fiscal policy choices derail the province’s fiscal recovery path,” he said. writes S&P in its analysis.
Asked to respond to the latest downgrade, British Columbia Finance Minister Selina Robinson provided a statement by email.
“The province remains the highest rated of all provinces by each of the major international and domestic rating agencies, including S&P, despite this review,” Robinson said. “S&P shares our expectations that British Columbia will see a robust rebound in 2021 and 2022, and this strong recovery will help us move forward.”
The minister noted that British Columbia entered the pandemic in “a strong fiscal and fiscal position” and called the investments the province has made to fight COVID-19 and support businesses “the right thing to do.” To do “.
“British Columbia’s recovery won’t happen overnight, but we are focusing on the opportunities that come with recovery and setting ourselves on a path to creating a more sustainable, inclusive and innovative economy,” he said. she declared.
The most recent ratings from other agencies posted on the province’s website show no change in BC’s ratings.