July 20, 2018
Credit Rating Agencies Endorse Manitoba's Deficit Reduction, Improved Budgetary Performance
– – –Managing Expenditures, ahead of Schedule on Deficit Reduction: Friesen
The Manitoba government is ahead of schedule in reducing the provincial deficit, Finance Minister Cameron Friesen announced today, following encouraging reports by S&P Global Ratings (S&P) and DBRS Ltd. (DBRS) on the government’s improved budgetary performance.
“Since forming government over two years ago when we inherited a serious financial mess, our work to fix the finances has been endorsed by global credit rating agencies,” said Friesen. “While the previous government repeatedly ignored warnings from credit rating agencies about its uncontrolled spending, these agencies have acknowledged our responsible efforts to put Manitoba on a path to sustainability.
“We care about our credit ratings because we understand that credit ratings matter.”
S&P affirmed Manitoba’s outlook remains stable which reflects their expectation that “in the next two years, the government will continue to make progress toward achieving fiscal balance.” The agency noted the province “has made meaningful progress toward its goal of eliminating its fiscal deficit by 2024, resulting in improved budgetary performance since our last review.”
S&P’s report follows a positive assessment by global credit rating agency DBRS in June. DBRS stated “the outlook for the provincial credit profile is improving” as the government has reduced its projected 2017-18 deficit to $726 million, which is $114 million lower than budgeted in the previous year.
“After a decade of chronic deficit spending and debt growth, budget deficits are now declining and the debt-to-gross domestic product (GDP) ratio is stabilizing,” said DBRS. “DBRS has observed a shift in the culture and institutions of government. There are efforts underway to increase the central capacity within the provincial government and an increasing focus on budget results and program outcomes.”
The minister noted 17 years of fiscal mismanagement by the previous government led to three consecutive credit rating downgrades and doubled the province’s debt to $22 billion in just eight years. In addition, for the first time in history the province’s debt servicing costs have exceeded $1 billion per year, meaning less money to invest in priority areas like in health care, education, social services and infrastructure, he added.
“We are correcting the course and implementing better budgetary practices,” said Friesen. “Of course we’re very pleased the agencies have recognized the progress being made. We continue to take action to reduce the deficit in a measured and responsible way, and remain on track to balance the budget in our second term.”
Friesen noted Manitoba’s deficit was projected to climb to $1.7 billion by 2019 if left unaddressed.
“Our government understands that fiscal sustainability is essential to protecting the services Manitobans value and rely on.”
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