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Moody's Investment Services affirms Aa2 credit rating for Quebec

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MONTREAL - Moody's Investors Service has decided to maintain Quebec's Aa2 credit rating, saying the province has a stable outlook.

The U.S. agency says the rating reflects Quebec's ability to minimize the impact of recent and ongoing deficits, which have accumulated since 2008, on the province's large debt burden.

Moody's noted that the Liberal government elected in April showed it is serious about achieving its budget targets by moving quickly to implement a series of measures, including a 20 per cent reduction in business tax credits.

The New York-based service says, however, that spending growth targets are "ambitious" and include some risks in execution.

The projections are for 1.8 per cent growth in 2014-15 and 0.7 per cent in 2015-16.

Michael Yake, Moody's vice-president and lead analyst for Quebec, says the province has a challenge ahead.

"The province will need to demonstrate that they can execute their plan and achieve the planned fiscal positions in the near-term, ensuring their elevated debt burden is reduced," he wrote in the advisory released Tuesday.

He has already indicated that Quebec's gross debt should reach 54.9 per cent of gross domestic product next year when it was estimated at 54.3 per cent in March.

Quebec Finance Minister Carlos Leitao welcomed the announcement by the bond ratings service, saying it confirms the "seriousness" of the government's plan.

"Moody's has sent a very clear message, to the government, the two opposition parties and the public: we must address Quebec's public finances," he said in a statement.

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