Fitch Ratings on Wednesday affirmed Ontario’s long-term issuer default rating at AA-, noting that the province’s budget for fiscal 2017 has Ontario on track to meet its goal of eliminating the annual budget deficit by fiscal 2018. The rating outlook is stable.
“Despite an uptick in the annual deficit in fiscal 2014, the province has recorded two successive years of declines since then and Fitch believes it remains on track to achieve its target assuming continued economic growth,” the New York City-based credit rating agency says in a statement.
The government has, “demonstrated the ability to exert considerable expenditure restraint while instituting revenue changes as necessary to achieve its deficit reduction objectives,” Fitch adds.
As of the end of fiscal 2016, the annual operating deficit is estimated to have declined to $5.7 billion, Fitch says.
Notwithstanding the deficit reduction efforts, Fitch still expects the province to be left with a large accumulated deficit, which will peak at $198 billion in fiscal 2017, and a debt burden amounting to nearly 40% of GDP.
The province aims to bring the debt burden down to about 27% of GDP; which “is likely to prove challenging,” Fitch says.
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