The U.S. credit rating agency Standard & Poor’s has downgraded its outlook for the province of Ontario, on the same day that the governing Liberals said that the $15-billion provincial deficit has receded by $300 million.

Standard & Poor’s announced Wednesday that it was revising its outlook for Ontario to negative from stable, citing the "challenging cost containment targets" the government has planned.

However, the ratings agency also affirmed its long-term and short-term credit ratings for the province.

Ontario Finance Minister Dwight Duncan said the ratings agency believes the province has a tough job ahead of it, which he called an indication of the importance of the plan for fighting the deficit.

"It’s very clear, it’s unequivocal, and I think it’s a good reminder to all of us the targets we’ve laid out are aggressive, they’ve reminded us of that, and we need to achieve them and we will," Duncan told reporters on Wednesday afternoon.

Duncan also said that other rating agencies could make similar moves, as Moody’s did when it put Ontario on credit watch after last fall’s election.

"Again, this is one of the agencies giving us feedback today. We heard from Moody’s in December, we may hear from them again, we may hear from DBRS. There are others that don’t routinely follow us that could come forward," he said.

"But we need to embrace this. We need to accept and say that the targets we’ve laid out have to be achieved."

Earlier Wednesday, the finance minister announced that Ontario’s deficit for the 2011-12 fiscal year had fallen from $15.3 billion to $15 billion, a drop of about two per cent.

Duncan credited changes made in the federal budget for helping lower the bottom line for last year.

During question period, the New Democrats accused Duncan of making dire budget projections so the Liberals can paint a rosier picture later and claim to be good fiscal managers.

"The minister of finance spent the last two weeks wrongly saying that the proposals put forward by New Democrats would add $1 billion to the deficit, but like magic the government found money for child care and other priorities," said NDP finance critic Michael Prue.

"Today that same minister said that the fiscal projections are much improved. When will this minister stop playing these games?"

The shot from the NDP just two days after its budget deal with the Liberals seemed to catch Premier Dalton McGuinty off guard.

"I thought we were friends," McGuinty said before Duncan could even respond to Prue's question.

Tory finance critic Peter Shurman released a statement Wednesday night, saying Standard & Poor's announcement validated the party's concerns.

"Two days ago Tim Hudak and the Ontario PC caucus stood against a budget that did not take us off the path to a $30-billion deficit," the statement reads.

"We took that stand because we are worried about the future of our province … we took that stand, because we didn't see the urgent action that is needed in our province. Today Standard & Poor's validated our approach, the approach the premier didn't think we needed."

With files from The Canadian Press