N.B.'s economic outlook downgraded
Standard & Poor's switches N.B.'s fiscal outlook to negative from stable
New Brunswick's economic outlook has been downgraded to "negative" by a major international bond-rating agency.
Standard & Poor's revised the province's outlook down from "stable" on Thursday morning, indicating in a statement the agency does not believe the province's budget will be balanced in the medium term.
"Standard & Poor's expects that as a result of this, the province's net tax-supported debt burden will rise significantly beyond the level outlined in the fiscal 2011 budget," the statement said.
"A material increase in New Brunswick's net tax-supported debt or a further deterioration in financial performances would result in downgrade."
The outgoing Liberal government's 2010-11 budget forecasted a $749-million deficit, which pushed the debt to $8.3 billion. The debt is forecasted to hit $9.5 billion in 2011 and $10.2 billion in 2012.
The Liberals had planned to balance the books in four years, a plan the rating agency indicated was not likely.
The incoming Progressive Conservative government has also promised to raise the province's finances out of its deficit situation within four years.
Premier-designate David Alward has promised to halt the final series of planned tax cuts on corporations and individuals earning more than $118,000. Alward has also promised to reduce the civil service and set up a government agency that will find government waste.
The Tory government will be sworn into office on Oct. 12.
The Standard and Poor's report said the province could reverse its downgraded economic outlook by eliminating its deficit and lowering its debt.
The bond-rating agency left the province's credit rating at AA- citing the province's strong record of managing its finances.
The Standard & Poor's figures cannot come as a shock to anyone who has been following New Brunswick's worsening economic trends, said New Democratic Party spokesman Dominic Cardy.
"Sadly, we are not surprised," Cardy said.
"It is very clear to anyone who has been following international financial trends … in the last few years that New Brunswick is facing a financial crisis, and the stability of our debt has been a concern."
The NDP made the deficit a key issue during the election campaign and repeatedly hammered the two traditional parties for what it called reckless promises.
The party was unable to win any seats in the Sept. 27 election, but it did get 10.3 per cent of the vote, roughly double the amount of popular support it earned in 2006.
NDP Leader Roger Duguay released television ads during the campaign saying the Liberals and the Progressive Conservatives were pushing the province off a "debt cliff."
Cardy said the bond rating agency's report reinforces the NDP's long-held belief that the Tories and Liberals have not been honest with voters.
"It is pretty worrying when we hear Mr. Alward claiming that his hundreds of millions of dollars of promises are a contract with New Brunswickers, but it is a contract he will have to break," Cardy said.