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Moody's drops Ontario outlook to negative

July 3, 2014

Moody's credit rating agency has changed Ontario's debt and issuer ratings to negative from stable, while at the same time reaffirming its Aa2 ratings.

Moody's Investors Services says the change reflects its assessment of the province's ability to meet its medium-term fiscal targets, especially with weak growth and higher-than-anticipated deficits projected for the next two years.

The ratings agency didn't wait for the Liberals to introduce their July 14 budget, but Premier Kathleen Wynne has said it will be identical to the May 1 budget that was rejected by the opposition parties, triggering the June 12 election.

Moody's Vice President Michael Yake says the agency viewed the May budget as "credit negative" for the province.

Finance Minister Charles Sousa says the recently re-elected Liberal government remains committed to eliminating the $12.5-billion deficit by 2017-18 even though it did "adjust" its short term deficit targets.

Sousa says the Liberals have cut expenses and become the leanest government in Canada with the lowest per-capita spending of any province.

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Source: Baystreet Economic Commentary (Canada)

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