REGINA, SK: The Canadian Taxpayers Federation is calling on the Saskatchewan government to cut spending and get the deficit under control after the bond rating agency Moody’s downgraded the province’s credit rating.
“Saskatchewan’s debt has been going up long before COVID-19 and it’s time to get spending under control,” said Todd MacKay, the CTF’s Prairie Director. “There are only two options: make tough decisions to get the deficit under control now or procrastinate and make even tougher decisions later.
“A credit rating downgrade is a flashing warning sign to get spending under control now.”
Moody’s downgraded Saskatchewan’s credit rating from AAA to AA1 on May 21. It noted the provincial government is projecting increased revenues, but spending is going up by more than seven per cent in 2021-22.
“Based on Moody’s estimate, the province’s net direct and indirect debt could exceed 150 per cent of revenue by 2023-24,” stated the Moody’s release. “These levels exceed Moody’s previous high estimate of 120 per cent over the next few years, and reflect a gradual shift away from the government’s focus on tight debt management.”
The Saskatchewan budget projects an operational deficit of $2.6 billion. The province’s taxpayer-supported debt is going from $10.8 billion in 2019 to $25.2 billion in 2025. Saskatchewan will spend $755 million to cover the interest on the debt this year.
“Saskatchewan has seen this sad movie before and we need to work quickly to make it a better ending this time,” said MacKay. “Last time, runaway debt led to multiple credit rating downgrades, tax hikes and deep cuts.
“We can do better this time if the government does what every Saskatchewan family and business has already done: find ways to save money.”