Manitoba credit rating lowered

The Manitoba government has had its credit rating downgraded for the second time in 13 months by S&P Global Ratings.

The international bond-rating agency said the province continues to post large deficits, which are adding to a long-term debt left by the former NDP government.

“The downgrade reflects the large, expenditure-driven structural deficits currently facing Manitoba,” S&P wrote in a release Monday.

“The current government ... has laid out a seven-year path back to operating balance mostly through restructuring its cost base. While these steps bode well for strengthening budget performances in the medium term, they will not prevent the government from posting large aftercapital deficits over the next two years, in our view.”

The change reduces Manitoba’s rating to A-plus from double-A-minus. Last July, the same agency cut Manitoba’s rating to double-A-minus from double-A.

Credit ratings affect how much interest governments pay on money they borrow. Finance Minister Cameron Friesen said the exact amount caused by credit change has yet to be worked out, but comes at the same time as central interest rates worldwide are starting to rise.

“Obviously, there’s going to be a cost to this in terms of dollars and cents. We’re still running calculations on exactly what it will mean,” Friesen said Monday.

The former NDP government started running deficits in 2009 with a plan to balance the books by 2015. It pushed back the target repeatedly and remained in the red, despite raising the provincial sales tax to eight per cent from seven in 2013.

The Progressive Conservatives swept to power last year on a promise to cut the sales tax by 2020 and balance the budget four years later.