Moody’s Investors Service has confirmed its triple-A credit rating for the province of British Columbia, citing its fiscal flexibility and its track record of prudent fiscal management.
In its annual report on the province, the rating agency notes that despite the recent, and expected future, increases in debt burden, “the considerable debt reduction achieved since 2003-2004 has given the province sufficient flexibility to absorb these increases in debt without significant and permanent damage to its financial position.”
Moreover, it says that B.C.’s large and diversified economy is another source of credit strength that supports the ‘Aaa’ rating. However, it also maintains a negative outlook on the rating.
“We believe that the increase in British Columbia’s debt is reversible, though the province will need to maintain its resolve to achieve fiscal redress and ensure that the debt burden stabilizes and ultimately declines,” says Jennifer Wong, Moody’s lead analyst for B.C.
“British Columbia has a strong track record of meeting budget targets and will need to maintain this resolve and discipline to ensure that deficits arising from the recent economic downturn remain temporary and do not impair the province’s finances on a permanent basis,” notes Wong.
“Moody’s recognizes that aggressively paying down debt during years of budget surpluses has kept our debt burden low. Together with our track record of meeting budget targets, this was recognized as a factor in confirming the highest available rating,” said Michael de Jong, B.C.’s minister of finance.
“This is further evidence that the tough choices we are making to keep the budget balanced are recognized by investors and are paying off in the savings that flow from a triple-A credit rating.”