In its annual report on Manitoba, Moody’s Investors Service says that the province’s Aa1 debt rating reflects sound fiscal policies that have helped to generate positive consolidated outcomes and improve its financial position. The rating is also supported by Manitoba’s diversified economy.

“Over the past several years, the province’s sound fiscal policy has sought to align revenues with expenses, thereby limiting debt accumulation”, says Moody’s senior vp David Rubinoff, lead analyst for Manitoba and author of the report. On a consolidated basis, Manitoba has recorded positive fiscal outcomes in each of the last three years measuring 6.0%, 3.5% and 3.9% of revenues respectively.

“Compared to GDP, Manitoba’s net direct and guaranteed debt has declined modestly to 22.9% at March 31, 2007, down from 24.5% at March 31, 2002”, says Rubinoff. “When compared to revenue, which has grown more rapidly than GDP, this measure of debt has fallen to 93.7% at March 31, 2007 from 104.8% at March 31, 2002.”

Manitoba’s economy is highly diversified, which adds stability and lessens the volatility associated with economic cycles. Although the provincial economy has expanded at a lower rate than the national average over the past ten years, real economic growth measured 3.3% in 2006, ahead of the national average of 2.7%.

Manitoba’s Aa1 rating also incorporates Moody’s assessment of a very high likelihood of extraordinary support from the federal government should the province near a default situation˜a highly unlikely scenario.

The rating agency’s report is a yearly update to the markets and does not constitute a rating action.