Saskatchewan loses AAA credit rating
REGINA, SK: The Canadian Taxpayers Federation (CTF) is calling on the Saskatchewan government to trim spending in the wake of a credit rating downgrade. Saskatchewan lost its AAA credit rating after bond rating agency Standard and Poor’s lowered its rating to AA+ with a negative outlook on June 24.
“This credit rating downgrade is pointing out the obvious: when we have less money we need to spend less money,” said Todd MacKay, Prairie Director for the Canadian Taxpayers Federation. “Other provinces such as Alberta and Ontario are ignoring warnings from credit rating agencies and keep on racking up reckless deficits. Saskatchewan needs take this credit rating downgrade seriously and trim spending immediately.”
Saskatchewan is currently running an operational deficit of $434 million and it’s increasing the provincial debt by another $1 billion with borrowing for infrastructure projects.
Standard and Poor’s states that Saskatchewan financial picture is better than other resource-dependent provinces such as Alberta and Newfoundland due to a more diversified economy. However, low commodity prices remain an issue.
“The downgrade reflects the impact that persistently low natural resource prices, in particular oil and potash, have had and are expected to continue having on Saskatchewan’s budgetary performance,” wrote Standard and Poor’s in its release.
In addition to announcing a downgrade, Standard and Poor’s warned of further downgrades with a negative outlook on the rating.
“The negative outlook reflects our expectation that, in the next two years, there is a one-in-three chance that the province will not be able to meet its budget targets of low or no growth in operating expenditures,” wrote Standard and Poor’s.
The Saskatchewan government has committed to transformational change to reduce spending prior to the next budget.
“The government’s commitment to transformational change is good, but it needs to be followed with real actions to trim spending,” said MacKay. “Saskatchewan people know we can’t continually spend more than we have and they expect their provincial government to live within its means.”