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Notwithstanding its recent downgrade for Canada and the federal government’s deficit explosion, Fitch Ratings has affirmed Ontario at AA- with a stable outlook.

In a new report, the rating agency said it expects the province’s debt to grow from almost $311 billion in fiscal 2019 to $422.8 billion in fiscal 2025, starting with a $25-billion deficit in fiscal 2021 followed by annual deficits over the next few years.

It forecasts that nominal GDP for Ontario will drop by 5.1% in 2020, followed by 7.1% growth in 2021.

In response to the economic disruption caused by Covid-19, Fitch expects the province to sharply increase borrowing in fiscal 2021 and 2022.

Yet, while the province’s debt burden is expected to rise, its debt sustainability should remain in line with its current rating category, Fitch said.

The agency also anticipates that the province will produce “a pragmatic fiscal consolidation plan.”

The stable outlook on Ontario’s rating is based on its expectations for the province’s debt sustainability and fiscal consolidation efforts.

While Canada’s sovereign rating doesn’t directly impact Ontario’s ratings, Fitch said “the significant increase in federal government debt… contributes to the corresponding growth in Ontario’s economic liability burden.”