Fitch Ratings has affirmed its ratings on the province of Ontario at ‘AA’, citing progress on the government’s plans to reach fiscal balance over the next few years.
The rating agency notes that the province has made “very positive” progress on a multi-year financial consolidation plan to achieve fiscal balance by fiscal 2018. In a new report, Fitch says that the province has made progress in implementing its financial plan, largely through expenditure restraint along with modest revenue measures, and a stabilizing economy.
That said, Fitch suggests that the lengthy timeframe for implementing the plan creates execution uncertainty, which is why it’s maintaining a negative outlook on the ratings.
“Although Fitch believes that near term budget goals may be exceeded, full fiscal recovery remains a distant target, even assuming that economic and revenue growth achieves the budget’s modest growth forecast, a factor that underscores the negative outlook,” it says.
“A greater challenge will be posed by the sustained low spending growth targets that the long-term forecast demands in order to make progress in lowering debt over time,” it adds.