Both agencies cite lack of fiscal plan and policy-driven debt in back-to-back BC downgrades
British Columbia received dual credit rating downgrades from S&P Global Ratings and Moody’s Ratings on the same day.
Both agencies pointed to the province’s rising deficit and lack of a clear strategy to restore fiscal balance, according to The Canadian Press.
S&P cut BC’s long-term issuer credit rating to A+ from AA- and reduced its short-term rating to A-1 from A-1+.
The agency described a “fiscal mismatch” in government operations and linked the downgrade—its fourth in four years—to “considerable” deficits and rapidly growing debt expected to continue through to the 2028 fiscal year.
S&P stated, “A lack of a credible medium-term plan outlining how the province will tackle its structural budgetary shortfall could cause us to weaken our financial management assessment, potentially leading to a lower issuer credit rating.”
The agency kept a negative outlook for the province’s finances, highlighting a one-in-three chance of another downgrade within two years if BC’s “commitment to fiscal consolidation continues to waver.”
Moody’s Ratings lowered its key baseline credit assessment to aa2 from aa1 and downgraded BC’s long-term issuer and senior unsecured debt ratings to Aa1 from Aaa.
In a news release, Moody’s cited “structural deterioration in British Columbia’s credit profile” and projected this year’s deficit to reach $14.3bn.
That estimate is more than 31 percent higher than the projection in Finance Minister Brenda Bailey’s budget released last month and 57 percent above the most recent estimate of last year’s deficit.
Moody’s said its outlook remains negative due to the lack of “clear visibility” on how the province plans to balance its finances.
The agency also flagged external pressures, stating, “The uncertain trade environment with potential further negative implications on the provincial economy and fiscal position adds further risks to British Columbia's credit profile.”
Moody’s pointed to policy decisions by Premier David Eby’s NDP government as the main driver of the deficit increase.
It stated, “The increase in deficits and rising debt largely stems from provincial policy choices, which we view as evidence of a continued weakening in governance and fiscal and debt management, from high standings.”
It added, “We view this as a notable departure from the province’s historical approach of budgeting that focused on limiting the growth in debt or protecting its fiscal position.”
In response, Bailey told reporters in the legislature that the government had expected a “strong likelihood” of downgrades due to the “complex circumstance” created by the Canada-US trade war.
She said Moody’s noted BC’s economy “remains strong and resilient and diversified.”
When asked about the agencies’ concerns over the lack of a balancing strategy, she responded, “The budget has us getting started on that target.”
She added, “We’re approaching this work with the very specific goal of protecting core services for British Columbians.”
Moody’s also noted that the end of BC’s consumer carbon tax on Tuesday is likely to add further pressure on the deficit. Bailey’s budget had projected a record shortfall of $10.9bn for this fiscal year.
BC Conservative Leader John Rustad criticized the NDP government’s fiscal management in light of the downgrades.
He said, “British Columbians are paying more and getting less. Now, we’re paying the price with a weaker credit rating, which means higher borrowing costs for our province.”
Rustad described the downgrades as “a direct consequence of reckless spending and economic mismanagement by David Eby.”
As of April, Saskatchewan and Ontario maintain relatively strong credit profiles. Saskatchewan is rated AA by S&P and Aa1 by Moody’s, while Ontario holds ratings of AA- and Aa3.
Quebec holds similar ratings, with AA- from S&P and Aa2 from Moody’s. Alberta has been upgraded to AA- by S&P and Aa2 by Moody’s, with a positive outlook, reflecting improved fiscal management despite some exposure to resource volatility.
Manitoba is rated A+ by S&P and Aa2 by Moody’s. Nova Scotia and New Brunswick carry ratings in the AA-/Aa2 range.
Prince Edward Island holds an A rating from S&P and Aa2 from Moody’s. Newfoundland and Labrador is rated A by S&P and A1 by Moody’s, with a stable outlook, though concerns remain due to rising debt and persistent deficits.
