Fitch Ratings has revised its rating outlook on the province of Ontario to “stable” from “negative,” citing its expectations for fiscal consolidation.
The rating agency affirmed its various sovereign ratings for Ontario Wednesday, while also revising the province’s rating outlook due to its belief that the province will “achieve its goal of fiscal consolidation by fiscal 2024.”
Fitch noted that the latest provincial budget includes annual deficits through fiscal 2023, and starts from a higher deficit base than previously estimated due to various accounting revisions.
It also said it believes the government’s plan to limit program spending to 1% growth through the consolidation period “will prove challenging.”
However, Fitch maintained that, “despite the challenges of achieving forecast budget targets, the province maintains a strong ability to absorb a moderate economic and revenue shock and still provide for debt burden metrics that sustain its ‘AA-‘ [rating].”