FISCAL FALLOFF: BC Credit Rating Downgraded, Rising Deficit Cited

(Image courtesy of CBC)

Two of the big three American credit agencies, Moody’s and Standard & Poor’s (S&P), downgraded BC’s credit rating, saying that the province’s ballooning deficit and lack of plan to resolve it is the reason. Moody’s now gives BC an “AA2” rating instead of “AA1” and S&P now rates BC as “A+” instead of “AA-.” 

This comes as the BC government presented its 2025 budget last month, which had an imbalance of $10.9 billion. This has made many financial analysts wary of BC’s monetary stability, which could impact the province’s ability to secure investment and acquire loans. Moody’s further stated in its report explaining the downgrade that it expects the BC deficit to rise to $14.3 billion for 2025-2026, a significant increase from the BC government’s estimates.

Premier Eby, since coming into power, has presented large increases in public spending, running large deficits in the process. The Premier defended his plans, saying the province faces significant challenges; nevertheless, British Columbians are still dealing with rising inflation and a weak housing market a few years into his tenure. 

BC Finance Minister Brenda Bailey said that the government knew of the strong potential of a downgrade due to the “complex circumstances” posed by the Canada-US trade war. Bailey would go on to say that the report lauds BC’s “resilient and diverse economy.” However, the report also states that the US remains the key export destination for valuable BC resources such as natural gas, electricity, metals, and lumber products, making them trade war fodder that, when targeted, could hurt British Columbians.

With BC’s fiscal situation looking more and more dire by the day and US-Canada trade relations reaching a historic low point, it remains to be seen if Eby can lift the province out of its deficit hole or if he’ll continue to keep digging it.