On April 26, international credit rating agency Moody’s Investor Services downgraded Ontario’s credit rating – a decision that could affect interest rates and increase the cost of servicing Ontario’s debt.
“This is terrible News for Ontario,” said Perth-Wellington MPP Randy Pettapiece. “It shows a real lack of confidence in the [Dalton] McGuinty government’s willingness to get its finances under control.”
Higher interest rates could spell big financial trouble for Ontario. The province already spends more on interest payments on the debt than it spends on transportation or the entire post-secondary education system.
For every one per cent hike in interest rates, the province is on the hook for an additional $500 million – equivalent to the cost of hiring 8,700 first-year nurses, or paying for 250,000 MRI exams.
The Moody’s decision is a sad commentary on the recent Liberal budget, Pettapiece said.
“The budget was a very weak response to a very serious problem, and that’s why I voted against it. It keeps Ontario on track to what could be a $30-billion deficit. Obviously the international credit rating agencies are also recognizing just how unrealistic the Liberal budget really is.”
Moody’s downgrade of Ontario’s credit rating comes just after Standard and Poor’s decision to reduce Ontario’s credit outlook to “negative.”
He said the government had tried to put a positive spin on that action, suggesting it would be an incentive for the province to meet its financial targets.
It’s a ridiculous argument, said Pettapiece. “Here we have a highly regarded, international financial agency warning the government that its performance is falling short – and they think that’s good News?”
On April 19 Pettapiece spoke in the legislature in favour of a motion calling on the government to reduce the province’s $280-billion debt. That motion was defeated when Liberal MPPs voted against it.
