BC's $14.3 billion deficit prompts rating cuts from both agencies over weak outlook and lack of plan
British Columbia’s credit rating has been downgraded by both S&P Global Ratings and Moody’s Ratings, with both agencies issuing the decision on the same day.
According to The Canadian Press, both cited the province’s growing deficit and lack of a clear plan to restore fiscal stability.
S&P reduced BC’s long-term issuer credit rating from AA- to A+, and lowered its short-term rating from A-1+ to A-1. The agency attributed the downgrade to “considerable” deficits and a rapid accumulation of debt that it expects to continue through the 2028 fiscal year.
In its statement, S&P said the government’s operations showed a “fiscal mismatch” and pointed to the “lack of a credible medium-term plan outlining how the province will tackle its structural budgetary shortfall.”
The agency warned this could weaken its financial management assessment and result in a further downgrade.
S&P maintained a negative outlook for the province’s finances, estimating a one-in-three chance of another downgrade within two years if British Columbia’s “commitment to fiscal consolidation continues to waver.”
Moody’s also issued a downgrade, lowering its key baseline credit assessment from aa1 to aa2, and its long-term issuer and senior unsecured debt ratings from Aaa to Aa1.
Moody’s stated in its news release that the change reflects “a structural deterioration in British Columbia’s credit profile.”
The agency projected this year’s deficit would rise to $14.3bn, a figure that is more than 31 percent higher than the forecast presented in Finance Minister Brenda Bailey’s most recent budget, and 57 percent higher than the final estimate for last year’s deficit.
Moody’s confirmed its negative outlook for the province, citing the lack of “clear visibility” on how the government plans to balance the books.
It also highlighted external factors, stating, “The uncertain trade environment with potential further negative implications on the provincial economy and fiscal position adds further risks to British Columbia’s credit profile.”
In its assessment, Moody’s placed direct responsibility on the province’s leadership.
It stated that “the increase in deficits and rising debt largely stems from provincial policy choices,” which the agency viewed as evidence of a continued weakening in governance and fiscal and debt management from high standings.
The agency described this shift as “a notable departure from the province’s historical approach of budgeting that focused on limiting the growth in debt or protecting its fiscal position.”
Bailey told reporters the government had anticipated the downgrades, citing a “strong likelihood” due to the “complex circumstance” caused by the Canada–US trade war.
She noted that Moody’s had acknowledged that BC’s economy “remains strong and resilient and diversified.”
When asked about the agencies’ concern over the absence of a fiscal plan, Bailey said the budget “has us getting started” on the path to balance.
She added, “We’re approaching this work with the very specific goal of protecting core services for British Columbians.”
Moody’s also referred to the government’s recent policy moves, including the end of BC’s consumer carbon tax on Tuesday, as contributing to the widening deficit.
Bailey’s February budget had already projected a record $10.9bn deficit for the current fiscal year.
Opposition Leader John Rustad of the BC Conservatives linked the downgrades to government decisions, calling them “a direct consequence of reckless spending and economic mismanagement by David Eby.”
He said, “British Columbians are paying more and getting less. Now, we’re paying the price with a weaker credit rating, which means higher borrowing costs for our province.”
Both agencies underlined that a lower credit rating can force governments to offer higher interest rates on bonds, complicate efforts to borrow, and deter investment.
As of April, other provinces continue to hold stronger credit profiles. Saskatchewan is rated AA by S&P and Aa1 by Moody’s. Ontario holds ratings of AA- from S&P and Aa3 from Moody’s. Quebec shares similar ratings, with AA- from S&P and Aa2 from Moody’s.
Alberta’s credit profile has improved, with upgrades to AA- from S&P and Aa2 from Moody’s, along with a positive outlook that reflects improved fiscal management despite some exposure to resource volatility.
Manitoba holds ratings of A+ from S&P and Aa2 from Moody’s. Nova Scotia and New Brunswick each carry ratings in the AA-/Aa2 range.
Prince Edward Island is rated A by S&P and Aa2 by Moody’s. Newfoundland and Labrador, which continues to face concerns due to rising debt and persistent deficits, is rated A by S&P and A1 by Moody’s, with a stable outlook.
