British Columbia has been stripped of its top credit rating by S&P Global Ratings, which said provincial debt will rise sharply over the next few years due to the ongoing impact of the COVID-19 pandemic.
Canada’s third-largest province will run a deficit this fiscal year that’s significantly larger than expected when the pandemic began, and that will lengthen the time to return to fiscal balance, S&P Global said in a statement explaining the one-notch downgrade from AAA to AA+.
The British Columbia government presented a budget in April that projected a deficit of $9.7 billion for the current fiscal year, which ends March 31, 2022, and smaller deficits for two years after that.
All told, the province’s tax-supported debt is likely to reach $102 billion or 172% of operating revenue by next March, rising to 195% by 2024, the ratings agency said.
Those numbers mean that B.C.’s key fiscal and debt metrics are no longer comparable with the province’s AAA-rated peers, S&P said. Before the pandemic, B.C.’s debt was about 123% of the provincial government’s revenue.
