In an annual report on the country, Moody’s Investors Service says that Canada is in a relatively good position to weather the current economic slowdown in North America.

Moody’s cites such improvements as declining international liabilities and the elimination of government deficits.

It says that a government debt rating of Aa1 reflects Canada’s high but declining level of debt in relation to its economic size.

“Supported by the expectation that Canada’s external financial position will continue to improve, and that its public debt ratios will also continue their downward trend, the outlook for the ratings is stable,” says Moody’s vice president and senior analyst Steven Hess, author of the report.

“The federal government has made considerable progress over the past few years by eliminating its budget deficit, which had reached elevated levels in earlier years,” says the analyst. “Despite some spending increases and tax cuts, the current fiscal year should be the fourth in a row to record a surplus.”

Moody’s reports that provincial finances have also improved, and that public sector debt ratios are likely to continue to show improvement over the next few years, bringing Canada more in line with the average for industrial countries.

In tandem with the United States, the Canadian economy has enjoyed a period of rapid economic growth and low inflation, greatly helping its fiscal consolidation. “Even with this year’s economic slowdown throughout North American, the medium-term economic outlook appears relatively favorable,” observes Hess.