N.L. faces credit risk if deficit isn’t controlled: Ball
Newfoundland and Labrador’s premier says his province is facing the risk of a credit downgrade if his government doesn’t make hard choices to control a ballooning budget deficit.
Dwight Ball announced Tuesday he’ll hold pre-budget consultations to discuss the province’s projected $1.96 billion deficit for 2015-16, which is 79 per cent higher than the original budget prediction. The province also says it’s expecting less than half the $1.2 billion in royalties from oil and gas originally projected due to falling prices and production.
Ball said during a news conference in St. John’s that if the deficit isn’t reduced, debt servicing costs could grow due to downgraded credit ratings.
“In anticipation of the deficit ... credit agencies want us to make sure we have a serious fiscal plan in place. We want to protect our rating because we all know the cost of borrowing will increase if the credit rating were changed. Given where we are financially in the province right now, this is the risk we see facing us.”
Ball was accompanied by Finance Minister Cathy Bennett and Siobhan Coady, the minister responsible for public engagement, during the announcement of the plan for 15 months of public consultations which begin next Monday.
The premier and the ministers said full details of the government’s deficit reduction plan will only come in the next budget, which won’t appear until the federal Liberal government presents its fiscal plan.
He repeated a campaign commitment that attrition will be the “preferred means” of reducing public sector payroll costs, rather than layoffs or early retirement packages. The new government has already said it is restricting all hiring to critical operations, suspending all nondiscretionary spending, restricting the use of consultants and discontinuing all non-essential travel.
NDP leader Earle McCurdy said the months of consultation are too long a time period to work out a plan on how to deal with the province’s financial situation.