Yesterday, the international credit rating agency Standard & Poor downgraded Ontario’s long-term credit rating from AA- to A+, while affirming Ontario’s short-term A-1+ rating.
The rating agency cited Ontario’s “consistently very weak budgetary performance and very high debt levels” as primary drivers of the credit downgrade. Ontario is currently running a $8.5 billion deficit. The Province is paying over $11 billion a year on interest payments to service its nearly $290 billion debt.
The Ontario Chamber of Commerce (OCC) is worried about Ontario’s fiscal outlook. Further credit downgrades or an increase to interest rates could drive up the cost of borrowing, which would divert money from priority areas including infrastructure and education.
The OCC is continuing to call on the Government of Ontario to tackle its deficit by making greater use of alternative service delivery models, applying more rigour to ministry program reviews, and exploring means-testing for certain services.
Improving its fiscal outlook will help Ontario’s business climate. Tomorrow, the Ontario Chamber of Commerce will be releasing a comprehensive report that will examine the impact that electricity prices are having on jobs and the Ontario economy.