One of the world's largest bond runners has broken Ontario's lowest credit rating in 16 years, saying that revenue cuts from the Initial Conservative Government will exacerbate the state's debt and debt problems.
In a report published in the afternoon, Moody Investors announced that he had reduced the long-term debt rate of Ontario to Aa3 of Aa2. Moody was the second downgrading of the province of this decade, and the previous one in 2012.
The move follows the economic statement of the province of its economic statement last month, and Premier Premier Premier Ford estimated that he will run a deficit of $ 14.5 billion for the financial year ending March 31, 2019 – more than double what the previous Liberal Government had projected in the last spring budget. It also follows the release of the latest financial and economic budget of the Ontario Financial Liability Office, which predicted that the deficits of the province will be lower above the Ford government's four year term – partly due to tax cuts that will take away revenue.
"Although the province has not introduced a multi-successful budget plan, Moody expects Ontario to post a number of relevant consolidated shortcomings, extending the current period of combined shortcomings that began in 2008-09," says the taxation agency. "Funding requirements for shortcomings and capital expenditure will lead to an increase in the direct and indirect direct level of debt of the state already high."
Ontario is the most owed province in the country, with around $ 325 billion net debt. Its debt ratio to GDP is expected to exceed 40 per cent this year, the second only to Newfoundland and Labrador.
Moody said he was expecting the economic growth of Ontario "to be moderate" to below 2 per cent annually over the next three years, which will hurt provincial revenue growth, "increase the challenge of returning to balanced budgets.
"Recent actions made by the province have included measures that reduce revenue levels, adding to budgetary pressures," he noted.
The new credit rating matches the one set by Moody's when the Premier Mike Harris came into an office in the mid-1990's, by a famous smiling to clean up the mess financial left behind by previous NDP and Liberal governments. After years of pollution from the Harris Government, Moody provoked the province to Aa2 in 2002. It has risen again to Aa1 – its highest grade – in 2006. Normally, the highest grades are kept on for national governments.