A major debt-rating agency is sounding the alarm on the Liberals’ big-spending pre-election budget.
Moody’s Investors Service has changed the outlook on the province of Ontario’s ratings from "stable" to "negative" in the wake of Finance Minister Charles Sousa’s March 28 spending plan, which featured a $6.7-billion deficit.
While not a credit downgrade to Ontario’s "Aa2" rating, it is considered a warning shot.
"With an election set for 7 June," the agency said, "the government released a 2018 budget that introduces a number of new spending initiatives and materially increases the capital infrastructure spending relative to previous plans. While this budget may not be implemented post-election, in Moody’s opinion, it highlights growing spending pressure that will need to be addressed in the near future."
Moody's warned that "downward pressure on revenue generation would be amplified if the province were to face unexpected negative economic shocks."
Progressive Conservative MPP Vic Fedeli said there are grave risks from spilling so much red ink.
"(Premier) Kathleen Wynne and the Liberals broke their promise to run a balanced budget for years to come, and are plunging Ontario into years of deficits," said Fedeli.
"Interest on our debt is already crowding out the services we all depend on like our schools, our hospitals and our roads. Ontario cannot afford a change in our credit rating."
Wynne, for her part, emphasized that "the ratings agency maintained, confirmed, our rating."
"It’s not a credit downgrade; it’s a forecast,” the premier said, noting “our economy is growing."
