Call it a double-credit take-down.
Not one, but two international credit-rating agencies, first Standard and Poor’s, then Moody’s, downgraded B.C.’s credit worthiness within hours on Tuesday (April 9).
S&P lowered B.C.’s credit rating to AA- from AA, while Moody’s lowered the province’s outlook to negative from stable, while confirming B.C.’s AAA rating.
“We believe that the province’s commitment to fiscal discipline and stability has wavered in recent years as B.C. has materially increased its spending for both operations and capital investment to unparalleled levels, while economic growth is slowing,” S&P said in its analysis.
Moody’s struck a similar note.
“The negative outlook for British Columbia reflects the risks to the province’s ability to slow a significant projected increase in debt amid rising spending commitments and its lack of commitment to return to fiscal balance within a specified time period,” it reads.
In other words, neither agency sees B.C. curbing spending any time soon, with each hinting at future rating downgrades.
These downgrades come after the B.C. NDP tabled a budget with a record-setting deficit of almost $8 billion.
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For B.C. United’s Peter Milobar, these assessments are indictments of NDP fiscal management with direct consequences for British Columbians.
“What it means is that we are going to be all asked to pay more tax dollars for the same, if not less services by the British Columbia government and that’s really at the core of the problem,” he said.
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Milobar said these changes will directly hurt residents already chafing under high personal-debt levels. More and more of their tax dollars will go toward servicing debt, leaving less money for services, he added.
“If health care was actually getting better, if crime and safety on our streets was getting better, I think people would understand the spending,” he said. “But when all of those areas are actually getting worse, it really does make you wonder what exactly it would take for this government to get things under control and not see our credit rating downgraded.”
Finance Minister Katrine Conroy, however, said B.C. continues to be a “strong economic leader” with one of the lowest GDP-to-debt ratios, adding that Fitch Ratings recently re-affirmed B.C.’s AA+ rating..
It is also the only province with a AAA rating from any of the major agencies, and both S&P and Moody’s point to B.C.’s strong economic fundamentals.
“We knew that there potentially could be a downgrading because of the slower economy, the high interest rates, the slower global economy,” she said. “So we knew that might happen.”
Conroy said the NDP inherited what she called a “deficit in infrastructure” in pointing to public demands for more hospitals and schools. “So those are things that we had to do and it was the right thing to do for the people of the province,” she said.
She also dismissed suggestions that the lower credit rating could impact B.C.’s ability to attract investment.
“Businesses continue to invest in B.C. and they like what we are doing when it comes to supporting people and supporting infrastructure,” she said.
Conroy said British Columbians expect government to support them during tough times.
“While some want to make cuts to the hospitals and schools people rely on, we know that’s the wrong decision and would make life harder for people when they need support the most. By providing key services and infrastructure we are building a stronger B.C.”