Credit agency rates province, Hydro ‘A’, but uncertainty in the air
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The Province of Manitoba and Manitoba Hydro both received an A from global credit-rating agency but a possible change in government next year, it says, adds an element of policy uncertainty.
Both the province and the publicly owned power company Tuesday received a high rating for long-term debt, or an A rating and a middle, or R-1, grade for their short-term obligations from DBRS Limited (DBRS Morningstar).
“All trends are stable, supported by a well-diversified and resilient provincial economy, the government’s commitment to fiscal sustainability, and prudent debt management,” it said in a news release.
“These attributes provide stability to the ratings, although a weakening global economic outlook and an upcoming provincial election in 2023 add an element of policy uncertainty and limit ratings improvement in the near term,” it said.
For the year ended March 31, 2022, Manitoba reported a deficit of $704 million — an improvement from the $2.1 billion deficit the year before.
The debt-rating service said the ongoing economic recovery, federal financial supports and strict cost management offset economic pressure resulting from the ongoing COVID-19 pandemic. Manitoba is now forecasting a $202 million deficit for this fiscal year.
The Progressive Conservative government projects shrinking deficits over the medium term but DBRS says recent budget “out-performance” means a balanced budget “remains well within reach.”
Still, the credit-rating service warns that “growing fiscal and economic headwinds” are likely to stall the improvement in Manitoba’s finances.
The next election is mandated to occur by Oct. 3 and current polls suggest that a change in government is possible, “adding an element of fiscal and economic policy uncertainty to the outlook,” the DBRS report says.
Finance Minister Cameron Friesen said the report is an affirmation of the “prudent debt management” of the PC government since it came to power in 2016. Now is not the time to relax, however, he said.
“We need to remain focused and disciplined with economic uncertainty and a potential slowing economy occurring across Canada and globally,” Friesen said in an email late Tuesday.
“Over the past year, Manitobans have been impacted by record high prices at the pump, rising interest rates, supply chain disruptions and the global impact instigated by the Russian invasion of Ukraine,” he said. “This is a critical time for Manitoba and we remain committed to help Manitobans with everyday affordability while remaining focused on future fiscal sustainability.”
After 20 years of reporting on the growing diversity of people calling Manitoba home, Carol moved to the legislature bureau in early 2020.
Updated on Tuesday, November 8, 2022 9:28 PM CST: Corrects typo in lede, tweaks headline