November 24, 2017

Winnipeg
2° C, Partly cloudy

Full Forecast

Advertisement

Advertise With Us

Manitoba's credit rating downgraded again

MIKE DEAL / WINNIPEG FREE PRESS</p><p>The Manitoba Legislative Building as seen from the air. S&P Global Ratings has downgraded the province's credit rating to AA-.</p>

MIKE DEAL / WINNIPEG FREE PRESS

The Manitoba Legislative Building as seen from the air. S&P Global Ratings has downgraded the province's credit rating to AA-.

The Pallister government took a hit Thursday when the influential S&P Global Ratings credit rating agency downgraded the province's rating.

The agency reduced the province's credit rating to AA- from AA.

S&P Global Ratings, formerly known as Standard & Poor's, cited the province's high debt burden compared with similar jurisdictions within Canada and internationally. However, the credit rating agency noted that a majority government, a diversified economy, and a low unemployment rate give the Pallister government the tools to deal with the situation.

It was not immediately clear how much more it will cost Manitoba to borrow, or how it might impact spending plans.

Subscribers Log in below to continue reading,
not a subscriber? Create an account to start a 60 day free trial.

Log in Create your account

Add a payment method

To read the remaining 769 words of this article.

Pay only 27¢ for articles you wish to read.

Hope you enjoyed your trial.

Add a payment method

To read the remaining 769 words of this article.

Pay only 27¢ for articles you wish to read.

Hey there, time traveller!
This article was published 14/7/2016 (497 days ago), so information in it may no longer be current.

The Pallister government took a hit Thursday when the influential S&P Global Ratings credit rating agency downgraded the province's rating.

The agency reduced the province's credit rating to AA- from AA.

S&P Global Ratings, formerly known as Standard & Poor's, cited the province's high debt burden compared with similar jurisdictions within Canada and internationally. However, the credit rating agency noted that a majority government, a diversified economy, and a low unemployment rate give the Pallister government the tools to deal with the situation.

It was not immediately clear how much more it will cost Manitoba to borrow, or how it might impact spending plans.

It was the second time in a year Manitoba's credit rating has been downgraded.

Last July, Moody's Investors Service downgraded Manitoba's credit rating to Aa2 from Aa1. The Moody's grade differs from the S&P grade because different agencies use different rating systems.

The Tories have blamed the former NDP government for leaving them with a $1-billion deficit, but have promised to balance the books within eight years.

Finance Minister Cameron Friesen said in a news release that the government is disappointed, but remains determined to follow its fiscal plan.

"While we are disappointed with the credit downgrade released today, our government is committed to improving the challenging fiscal position that our province finds itself in as a result of the overspending and missed targets witnessed under the previous administration," Friesen said. "Our government recognizes the importance of credit ratings and the impact that changes to our credit rating and outlook may have on our province’s bottom line."

One of the first actions Friesen and Premier Brian Pallister undertook after being sworn into cabinet was to fly to Toronto to meet with S&P Global and other credit rating agencies and major lenders.

S&P Global Ratings said in a release Thursday that, "We are lowering our long-term issuer credit and senior unsecured ratings on the Province of Manitoba to AA. The downgrade reflects our expectation that Manitoba will have a sustained tax-supported debt burden of more than 270 per cent of consolidated operating revenue in the next several years, which is materially higher than that of domestic and international peers."

S&P Global Ratings warned there could be an additional downgrade in the next 24 months if Manitoba's performance does not improve.

"When the newly elected Progressive Conservative party introduced its first budget at the end of May 2016, a mere six weeks after coming to power, it also stated that the year-end deficit for fiscal 2016 would be more than $1 billion, over 50 per cent higher than the previous government's update provided in March 2016. The new government has set a target to return to fiscal balance within a lengthy eight years, but did not provide a detailed fiscal plan beyond the current fiscal year," S&P Global Ratings said.

Todd MacKay, prairie director of the Canadian Taxpayers Federation, said the current rating downgrade should be a wakeup call to the new government that it needs to rein in its spending.

"We all knew we were in a mess, what Standard and Poor’s is saying is that they expect things to get worse rather than better and that is based on government choices today," MacKay said.

The Progressive Conservatives dropped their first budget on May 31, which revealed the budget deficit continued to be huge — $889.9 million for core government services, $911 million when the performance of Crown corporations and other reporting entities are included. Spending increased in almost every department except for agriculture.

S&P Global, along with MacKay, criticized the budget for lacking a five-year plan to show where the province's fiscal house was heading.

"They put off some of the tough decision they needed to make, they didn't need to raise spending," MacKay said. "People lending us money really want to know what is going on for the next few years and that wasn't there."

Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce, said he was discouraged by the announcement, but said the new government with its mandate to find efficiencies is poised to turn the ship around.

"But it wasn't entirely unexpected, as a chamber we had been advising the previous government for years that its fiscal stewardship was mortgaging our future," Remillard said.

"We look forward to the 2017 budget, which absolutely has to be a detailed plan to say how we are going to get the deficit under control, maybe this will additional impetus to move up the timeline from eight years to something in the more foreseeable future."

Flor Marcelino, interim leader of the NDP, was also critical of the Tories for the downgrade.

"We are disappointed, but not surprised in this new direction that Pallister is taking the province," Marcelino said in a release.

"The Pallister Conservatives' budget was a debacle of misleading numbers, lack of projections and an inability to explain their accounting or plans. They couldn't convince Manitobans to have confidence in their ability to manage out province's finances, and it now looks like they had the same trouble with their creditors. We hope this will be a wakeup call to the Conservatives to level with Manitobans about their real agenda."

nick.martin@freepress.mb.ca

kristin.annable@freepress.mb.ca

Read more by Nick Martin and Kristin Annable.

Advertisement

Advertise With Us

History

Updated on Thursday, July 14, 2016 at 6:36 PM CDT: corrects agency name

6:43 PM: corrects agency name, corrects errors in July 1015 credit rating drop -- to Moody's, adds graph

7:27 PM: corrects agency name, corrects errors in July 1015 credit rating drop -- to Moody's, adds graph ; added quotes, details

7:36 PM: corrects agency name, corrects errors in July 1015 credit rating drop -- to Moody's, adds graph ; added quotes, details, fixes minor typo

7:48 PM: adds comments

You can comment on most stories on The Winnipeg Free Press website. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or digital subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to The Winnipeg Free Press print or digital subscribers only. why?

Have Your Say

Comments are open to The Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective January 2015.