Quebec forgoes additional tax reduction
Fickle Finances: Why Quebec's Credit Score Varies
Let's talk about the mixed reviews Quebec is getting from credit rating agencies, huh? Ain't that a curiosity? While Standard & Poor's (S&P) took a swipe at Quebec's creditworthiness, slapping them with a historic downgrade, DBRS kept their cool, keeping the province's credit rating steady.
Set your alarms, 'cause DBRS made their move on Tuesday, releasing a statement that left Quebec's credit rating at AA (low) with a "stable" outlook. Five agencies are keeping an eye on Quebec's economic health, and boy, do they offer different opinions!
Back in April, S&P dealt a heavy blow to the Legault government, lowering Quebec's credit rating for the first time in thirty years, from AA- to A+. Ugh, talk about a downer. But remember, this is just one agent's take.
DRBS has its own story to tell. Despite expecting a short-term deterioration in Quebec's budget and debt, they believe the province can manage its public finances without too much trouble. Why? Well, it's got to do with Quebec's Slow spending growth, unwavering commitment to restore budgetary balance, and the size and diversity of the province's economy.
DRBS chimed in, saying, "Despite this short-term deterioration, the province remains committed to restoring budgetary balance by 2029-2030, in line with the objective set out in last year's budget."
Quebec Finance Minister Eric Girard projected a record deficit of $13.6 billion this year and a near-freeze on spending for the next five years (sane move, right?). Last year, spending skyrocketed by 8.8%—yeah, that's rare!
DRBS acknowledged the short-term deterioration in Quebec's budget prospects and substantial investment program. But they also noted Quebec's revised debt reduction targets, with the net debt-to-GDP ratio aiming to reach 35.5% by 2032-2033 and 32.5% by 2037-2038 (previously 33.0% and 30.0%, respectively). A bit of wiggle room, if you ask me.
Now, don't get too excited. The agency warned that "persistent commercial uncertainty" could weigh heavily on Quebec's economy, dampening consumer and business confidence and investment intentions. But they reckon domestic consumption will stay robust due to monetary policy easing, strong labor markets, and generous household savings.
So, why the discrepancy between DBRS and S&P? Well, credit rating agencies like DBRS and S&P use their own set of criteria and methodologies to evaluate creditworthiness. Their differing views could stem from contrasting views on Quebec's fiscal policies, economic outlook, or risk assessment. Or maybe it's other factors like Quebec's strong economic fundamentals, stable political environment, or access to financial markets. Without specific details from DBRS about their decision-making process, it's hard to say for sure. But these general factors could contribute to the divergence in credit rating assessments between DBRS and S&P. Who'd've thought finance could be so drama-filled? 🙃
The discrepancy between DBRS and S&P in their credit rating assessments for Quebec might be due to their contrasting views on Quebec's fiscal policies, economic outlook, or risk assessment. This dichotomy could also stem from factors such as Quebec's strong economic fundamentals, stable political environment, or access to financial markets.
The differing opinions among five credit rating agencies, including DBRS and S&P, highlight the complexity of evaluating a province's creditworthiness, as each agency employs unique criteria and methodologies for their assessments.
