Moody's sees 'credit negative' actions in provincial budget
Bond-rating agency doesn't make any changes to New Brunswick's credit rating
Moody's Investors Service is describing the first budget of Brian Gallant's Liberal government as "credit negative," but the influential bond-rating company has not made any adjustment's to the province's credit rating.
The 2015-16 budget released Tuesday projects a deficit of $476.8 million, which Moody's notes is equivalent to 5.7 per cent of the province's revenue. The expected deficit in 2014-15 is $255.4 million which represents about 3.1 per cent of provincial revenue.
Moody's is now assuming the province will not manage to balance its budget in 2017-18, which was set as a target last year by the former Progressive Conservative government of David Alward.
Finance Minister Roger Melanson didn't present a timeline for balancing the budget when he unveiled his spending plan for 2015-16 on Tuesday.
"The increase in the size of the 2015-16 deficit and lack of sustained progress in returning to balanced budgets in recent years are credit negative," said Moody's New Brunswick analyst, Michael Yake.
The report notes the higher than expected deficit in 2015-16 is offset by a lower than expected deficit for last year.
"Across these two years, New Brunswick's net financing requirements should remain roughly the same as previously forecasted," states the Moody's report.
The service did not announce any changes to New Brunswick Aa2 credit rating, which is a step below the agency's highest rating.
Moody's downgraded New Brunswick's credit rating from Aa1 to Aa2 in August 2009.