MOODY’S Investors Service has confirmed British Columbia’s Aaa credit rating for the 12th year in a row, as well as a stable outlook, thanks in part to the Province’s track record of prudent fiscal planning and diversified economy leading to economic growth, Finance Minister Mike de Jong announced on Monday.
“We have maintained a focus on prudent controlled spending while attracting investment, and diversifying our industries and export partners,” said de Jong. “The external economic situation remains uncertain, which means we must be vigilant and continue to put B.C. on solid economic footing to weather any downturns. The upcoming budget will continue on this path to bring opportunities that create jobs and continued economic growth that pays for health, education and social programs for British Columbians.”
In affirming the Aaa-stable rating — the highest possible — Moody’s writes: “The Aaa issuer and debt ratings assigned to British Columbia reflect the diverse and relatively strong provincial economy, track record of prudent fiscal management and a high degree of flexibility to accommodate revenue and expenditure pressures. These positive elements helped the province return to balanced budgets in 2013-14 following the 2009 recession faster than most other Canadian provinces, and the province has posted a plan of continued balanced budgets across its rating horizon.”
Moody’s also says: “The economy of British Columbia, along with a level of taxation that is at the lower end of Canadian provinces, represents an important credit positive for the Aaa rating. The large and diverse economy provides the province with a large base on which to apply a productive tax base, ensuring that provincial revenues are not strongly impacted by a decline in one particular sector.”
It adds: “While Canada typically sees over three-quarters of exports flow to the U.S., this market accounts for about half of British Columbia exports. Other key markets for the province include China (17%), Japan (10%) and other Asian countries (9%). This wide diversification of sectors and markets reduces the vulnerability of the provincial economy from sector-specific or trading partner-specific shocks.”
Moody’s also writes: “British Columbia is rated at the higher end of Canadian provinces, which span a range of Aaa to Aa3. British Columbia has demonstrated strong fiscal management and performance in recent years, as evidenced by the quick return and maintenance of balanced budgets following the 2009 recession and limited increase of its debt burden during the years it produced deficits. The province’s diverse economy, in both industrial mix and external trade partners, has also helped British Columbia avoid the economic difficulties impacting several other Canadian provinces presently.”
Since November 2004, the Province has received seven credit rating upgrades and is now the only province rated triple-A by each of the international rating agencies. Standard & Poor’s most recently affirmed its AAA rating in April 2016, following Budget 2016. The Dominion Bond Rating Service affirmed B.C.’s AA (high) credit rating in April 2016, and Fitch affirmed the Province’s AAA rating in April 2016.