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British Columbia’s credit is falling thanks to the NDP government’s historic deficits. 

S&P Global Ratings has downgraded the province’s credit rating for the third time.

S&P Global Ratings changed the province’s credit rating from AA to AA- on Monday, putting it on par with countries like Slovenia and Estonia. Another credit hit would have B.C. join countries like Kuwait and Bermuda in the A+ rating

“The negative outlook reflects a one-in-three chance that we could lower the ratings in the next two years if, in our view, the province’s commitment to fiscal consolidation continues to waver, as reflected by persistent large after-capital deficits,” said the credit rating agency.

The agency added that B.C.’s credit rating could be lowered further if it maintains its current fiscal trajectory, consisting of sizable deficits and free cash flow less than 40% of the following year’s debt service. 

“Lack of a medium- and longer-term view and commitment to ensure fiscal sustainability could also affect the rating,” added S&P Global Ratings.

However, the rating agency said that in a best-case scenario, the economic outlook could improve to “stable.” This shift could come if the current fiscal trajectory was reversed, “bolstered by stronger economic growth and/or financial prudence, that positively affects budgetary performance.”

In reality, the credit agency expects the province to continue producing deficits larger than 5% of operating revenues and continue with record level after-capital deficits of about 20% of total revenues, not seen since the pandemic. S&P Global Ratings added that B.C.’s tax-supported debt will keep rising, reaching 182% of operating revenue, or $156 billion, by the end of the 2027 fiscal year. 

“We believe that the province’s commitment to fiscal discipline and stability has wavered in recent years as B.C. has materially increased its spending for both operations and capital investment to unparalleled levels, while economic growth is slowing.” 

The Canadian Taxpayers Federation has called on David Eby’s NDP government to rein in spending following the credit rating decrease. 

“Massive deficits and a steep increase in provincial debt is threatening the sustainability of our province. Premier David Eby needs to start making responsible financial choices for British Columbians,” said Carson Binda, CTF’s B.C. Director. 

British Columbia’s budget this year saw the biggest deficit in the province’s history, at $7.9 billion. The total provincial debt is set to reach $123.3 billion by the end of this year, according to the CTF. When the NDP formed government in 2017, the provincial debt was 69.8 billion.

Despite the negative outlook, the credit agency said that the province does have considerable economic strengths, bolstered by sectors such as forestry, mining and natural gas, financial and real estate services, and construction and manufacturing.

Looking at 2025 and beyond, the credit agency believes that B.C.’s economy will be bolstered by natural gas when LNG Canada’s facility is anticipated to come online.

S&P Global Ratings wasn’t the only credit agency to cast a negative outlook on British Columbia. Moody’s Ratings, a rating agency with more than 115 years of history and expertise, changed its outlook from stable to negative for the province on Tuesday.

Credit rating decreases aren’t just a warning sign. With every decrease, the province needs to pay more to borrow money. According to the CTF, interest charges on the provincial debt will cost the province $14.6 billion over the next three years.

“Eby and Finance Minister Katrine Conroy need to start being responsible with taxpayers’ money,” said Binda.

True North reached out to B.C.’s Ministry of Finance and Premier Eby for comment but received no response.