One of the world's largest bonded tenants for the last 16 years has lowered Ontario's credit rating to the lowest level, saying that the progressive conservative government's cuts in revenue will aggravate the province's deficit and debt problems.
On Thursday afternoon's report, Moody's Investors Service announced it has cut its Ontario long-term debt rating Aa3 Aa2. This was the second downturn in the Moody's Decade Province, the previous one in 2012.
The move comes after the government released its economic downturn last month, in which the first year of President Doug Ford 's first year government had a budget deficit of € 14.5 billion at the end of the financial year, which ended March 31, 2019, more than two times the previous liberal government had predicted last spring's budget. It also follows from the release of the Financial Reporting Office in Ontario's latest budget and economic outlook, which foresees that the province's deficit will be higher than the Ford government's four-year maturity, partly because of the reduction in taxes that will allow them to emerge from their income.
"Although this province has not submitted a multi-annual budget plan, Moody's expects Ontario to launch a significant consolidation deficit after several years, widening the current consolidated deficit period that began in 2008-2009," said the rating agency. "The financing requirements for deficit and capital expenditures will increase the level of net direct and indirect debt already increased in the province."
Ontario is the country's most indebted province, with debt of about € 325 billion. The debt-to-GDP ratio is expected to exceed 40 percent this year, secondly, only in Newfoundland and Labrador.
Moody's said it predicts that Ontario's economic growth over the next three years will be "moderate" below 2 percent per annum, which would damage provincial revenues, "increasing the challenge of returning to balanced budgets.
"The recent measures taken by the province included measures that reduce revenue levels by increasing budgetary pressures," noted.
The new credit rating is consistent with what Moody's predicted when Premier Mike Harris took office in the mid-1990s, pitying to clear the remaining fiscal problem of the previous NDP and Liberal government. After the Harry government's austerity years, Moody's improved the province to Aa2 in 2002. In 2006, it again raised Aa1 – the second highest rating. Major ratings are usually reserved for national governments.