New Brunswick has been given an A1 rating and stable outlook by Moody’s Investors Service in its annual report on the eastern Canadian province. The rating reflect the province’s attainment of budgetary targets, only modest new debt, and its gradually improving debt ratios, says Moody’s.

“The rating also reflects how New Brunswick’s resource-based economy has been growing more diverse, though still generating lower incomes than the Canadian average,” says Moody’s senior VP Steven Hochman and author
of the report. “Over the near term, the New Brunswick economy should benefit from nascent recovery in the US and Canada.”

Moody’s reports that debt ratios for the province have been slowly improving, as have the medians for Canadian provinces. New Brunswick’s current debt-to-GDP slightly exceeds the provincial median while debt-to-revenues is at the median.

Recent years’ financial results reflect stability, says the Moody’s report, even in the face of economic fluctuations. The province generated a narrow surplus in 2001-02 after transfers to the Fiscal Stabilization Fund and other funds for future disbursement. The province has also proposed a balanced budget for 2002-03 that includes as revenue a withdrawal from the FSF.

The province’s pace of economic growth slowed in 2001 more sharply than expected, but a modest improvement is projected for 2002. Income and labor force performance measures such as the unemployment rate are weaker in New Brunswick than the Canadian averages, but the gap has been narrowing.

“Resource-based industries play an important role in the province’s economy, increasing its sensitivity to commodity price movements,” says Hochman. “And construction, telecommunications and business services are contributing to growth and diversification.”

The rating agency’s report, “New Brunswick: Global Credit Research,” is a yearly update to the markets and is not a formal action to alter the credit rating of the issuer.