VICTORIA — Premier David Eby and his NDP government were dealt a fiscal double whammy this week, when two leading rating agencies downgraded the province’s credit on the same day. Read More
S&P and Moody’s faulted the NDP for piling up deficits and debt with no end in sight
S&P and Moody’s faulted the NDP for piling up deficits and debt with no end in sight
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VICTORIA — Premier David Eby and his NDP government were dealt a fiscal double whammy this week, when two leading rating agencies downgraded the province’s credit on the same day.
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S&P and Moody’s faulted the NDP for piling up deficits and debt with no end in sight. Neither could identify a credible plan to rein in spending or bring the books back into balance.
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Both agencies blamed decisions that predate the current crisis brought on by Donald Trump’s tariff threat.
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Both warned that if trends continue, further downgrades were likely. Both ranked B.C.’s fiscal outlook as “negative.”
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Informed Opinion
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S&P: “The negative outlook reflects a one-in-three chance that we could lower the ratings in the next two years if the commitment to fiscal consolidation continues to waver, as reflected by persistent and substantial deficits, on both an operating and after-capital basis, compared with those of peers.”
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Moody’s: “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.
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“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. The lack of clarity by the government on a path back to balance further weakens fiscal management.”
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S&P echoed Moody’s finding that the Eby government has departed from B.C.’s “commitment to fiscal discipline and stability.”
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The point of departure was between the Eby government and the one headed by John Horgan.
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Horgan, and his first finance minister, Carole James, took fiscal responsibility seriously. Both remembered how the NDP government of the 1990s sacrificed its credibility, which became a factor in its crushing defeat in 2001.
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James, with her first budget, paid off B.C.’s $1 billion direct debt inherited from the B.C. Liberals. She offset a $1 billion hole in the deferral accounts at B.C. Hydro, a $1.3 billion loss at ICBC, and still delivered a $300 million surplus.
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The ratings agencies responded by continuing B.C.’s top rank, triple A (AAA) credit rating, an accomplishment that James cited with pride.
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“It shows that our plan to invest in people while balancing the budget is not only possible, but also fundamental to building a strong and sustainable economy,” declared James.
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“These high credit ratings signal confirmation from investors and financial markets that we’re on the right track. They are also a signal to investors that our province is an attractive place to do business.
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