Moody’s Investors Service today upgraded the debt and issuer ratings of the province of British Columbia.

Moody’s says that the rating upgrade reflects the implementation, in recent years, of a well-structured fiscal framework, leading to a reduced debt burden. In addition, regulatory reforms and tax reduction initiatives have helped to support a strengthening of economic fundamentals.

“Since the 2002-03 budget, the government has followed a fiscal plan focused on realigning revenues and expenses and containing growth in tax-supported debt. Fiscal targets have been surpassed, consistently, reflecting prudent economic and revenue growth forecasts and the use of contingency reserves,” it says. “Preliminary results for 2004-05 indicate a larger-than-budgeted surplus of $1.7 billion, owing to discipline in maintaining expenditure targets and strong revenue flows from corporate taxes, natural gas royalties and federal transfers.”

“The surplus forecast for this fiscal year will allow for a significant reduction in tax-supported debt, which is expected to decline to 18.0% of GDP at March 31, 2005, compared to 21.0% at March 31, 2003,” Moody’s notes. Based on the current three-year plan, and the government’s history in achieving fiscal targets, Moody’s anticipates further strengthening of debt ratios over the medium-term.

“Regulatory reforms and tax reduction initiatives, coupled with high commodity prices, have contributed to improved economic fundamentals, as reflected in strong jobs growth, increased business confidence and robust domestic demand,” it says, noting that the economy expanded at a rate of 2.5% in 2003, despite the impact of various negative shocks, including SARS, BSE and extensive forest fires. The government forecasts economic growth of 3.3% in 2004 and 3.1% in 2005.

Moody’s announcement follows recent upgrades from Dominion Bond Rating Service and Standard and Poor’s.