Deficits ahead for B.C., credit agency says

Credit agency Morningstar DBRS says B.C's. economy is strong and stable, but warns of years of deficits ahead.

The U.S.-based agency said on Tuesday that its short- and longterm debt credit rating for B.C.'s economy remained high.

“The credit rating confirmations reflect the underlying strength and diversity of the province's economy, its disciplined management practices and its strong balance sheet,” the agency reported.

It noted with a provincial election coming this October it's a time of spending for the NDP government. The 2024 B.C. budget plans for increased spending, funded by debt.

“Morningstar DBRS expects (this) to result in reduced flexibility in the years to come. However, the province's historically prudent fiscal approach and track record of outperformance continue to lend stability to its credit profile,” the company said.

The 2024-25 budget calls for a deficit of $7.9 billion, following a $5.9 billion deficit for 2023-24. More deficit years are forecast for the medium term.

“In line with the past two budgets, B.C.'s 2024 budget does not present any plan for a return to balance, however, it continues to advocate for modest year-over-year declining deficits,” the statement read.

The growing debt will drive up the province's interest payments.

In B.C's last budget under Premier John Horgan, debt servicing accounted for $1.3 billion annually. In the year starting April 1, 2024, that climbed to $2 billion — more than the government currently spends on the housing, public safety, forests, attorney general or transportation ministries.