Reaffirmed bond rating shows sound budgeting, strong economy
DBRS has reaffirmed Prince Edward Island’s bond rating as stable, signaling that the province remains a good choice for potential investors and its economy is on the right track.
The bond rating agency’s report states that Prince Edward Island’s economic outlook is positive and its fiscal outlook continues to improve, noting that the balanced 2017-18 operating budget is the most positive credit development in recent years. Other indicators are strong, including:
• the Island’s population growth, which leads the Atlantic region;
• housing starts are up 20 per cent so far compared to 2016;
• international exports are up 7.1 per cent; and
• employment growth is double the national rate.
The DBRS report adds that the province’s strong economy and improving budgetary results have helped reduce its debt level.
“Maintaining a stable bond rating is a result of sound financial management – with the help of our balanced budget – and a strong, growing economy,” Finance Minister Allen Roach said. “I would like to thank our public service for its prudent use of taxpayer dollars, which has helped our province live within its means while creating increased prosperity for Islanders.”
Prince Edward Island’s economy expanded by 2.4 per cent in 2016, while the outlook for 2017 and 2018 suggests moderate growth in the range of 1.0 to 1.5 per cent, consistent with private sector expectations. It notes that the strong economy and improving budgetary results have helped reduce the debt level to 41.2 per cent of GDP this year from a peak of 49.1 per cent in 2013-14. DBRS expects the debt level to fall below 40 per cent of GDP in 2019-20.
“The long-term outlook for growth is also favourable, with improving population growth, a weak Canadian dollar, and rising demand for the province’s principal exports,” the report states. “Moderate revenue growth and rising federal funding for infrastructure will enable the province to moderately expand its health budget and increase capital investment in priority areas.”
The two other bond rating agencies, Moody’s and Standard & Poor’s, will be releasing their ratings in the coming weeks.