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Moody’s, S&P maintain Newfoundland and Labrador's credit ratings

Finance Minister Tom Osborne.
Finance Minister Tom Osborne. - SaltWire Network

No downgrade is reflection of progress, finance minister says

Finance Minister Tom Osborne said the Government of Newfoundland and Labrador is committed to continued improvement for the province’s financial outlook.

“Let me put it to you this way: I will be very forthright in saying that we haven’t yet turned the corner, but I can see the corner and our focus is on getting there,” he said Wednesday in a brief interview with The Telegram.

Osborne spoke after Moody’s affirmed the provincial credit rating, with a previously stated negative outlook (long-term ‘Aa3’). Standard and Poor’s has also held firm, with a stable outlook for the province (rating long-term ‘A’ and short-term ‘A-1’).

There was no downgrade.

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“While it’s not the be all end all by any stretch, these are independent agencies that say that the fiscal situation of the province merits keeping our ratings where they are,” the minister said.

Osborne said the government is continuing to look for “efficiencies,” with an eye on the commitment to achieving a balanced budget by 2022-23.

This year, the province spent more than forecast in the plan to reach that goal.

Making the mark is considered key.

“That’s something that government is absolutely focused on,” Osborne said.

Moody’s noted the province has the second-highest debt burden of any Canadian province, flagging the high debt level of Nalcor Energy, now accounting for 35.6 per cent of the province’s total direct and indirect debt. The agency called the debt level of Nalcor, “a significant contingent liability of the province,” risking a downgrade without improvement.

The agency suggested a few things that could improve the province’s outlook, including following the long-term budget plan, but also offering more information on electricity rate mitigation and how it might affect the books overall.

  1. read closely into commentary related to some more recent decisions of the Liberal government.

“I feel absolutely vindicated, to be honest with you, because despite some of the naysayers in regards to how we dealt with our public-sector unions, Standard and Poor’s have said that our cost-reduction efforts have already produced results, including a reduction of 1,200 positions through attrition, including a negotiated wage freeze and elimination of severance,” he said.

“They’ve very clearly outlined that the approach that we’ve taken with the public-sector unions is the proper approach.”

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