Standard & Poor’s Ratings Services today said that neither the ratings on the Government of Canada (AAA/Stable/A-1+), nor on any of the major federal Crown corporations, would change as a result of the federal budget unveiled yesterday afternoon.

S&P noted he federal government continues to register surpluses, with the budget announcing an expected surplus of 0.6% of GDP in fiscal year 2007 (ending March 31, 2007) to be put toward debt reduction. The budget projects continued small surpluses in fiscal years 2008 and 2009, near-zero in GDP terms, dedicated to continued debt repayment of at least $3. billion per year.

“Such performance is in line with our previous expectations,” said S&P credit analyst Nikola Swann. “Combined with continued real growth in GDP, the burden of federal debt on the Canadian economy should continue to decline, as it has since the late 1990s,” he added.

Canada’s fiscal position remains the strongest of the G7, although less strong than some other ‘AAA’ sovereigns, such as Australia, Sweden, or Norway, all of which have achieved net creditor status and continue to post surpluses, effectively saving in advance of anticipated demographic and other age-related spending pressures.

The budget also announced the impending consolidation, with central government borrowing, of future borrowing by three of Canada’s major federal Crown corporations: Business Development Bank of Canada; Canada Mortgage and Housing Corp.; and Farm Credit Canada. Consolidated borrowing is to begin in early 2008.

Debt already issued by these three is to remain outstanding, with no change to the current arrangement of central government borrowing support, which makes this debt backed by the full faith and credit of Canada.

As a result, S&P said it expects no change in the ratings on these three, nor on the debt they have issued.

Export Development Canada, the Canadian Wheat Board and the Canada Housing Trust No. 1 are to continue to borrow in their own name, and continue to benefit from the same system of central government borrowing support.