PC finance minister blames NDP for latest provincial credit downgrade

Progressive Conservative Finance Minister Cameron Friesensays Manitoba'sformer NDP government is to blame for the province's latest credit downgrade.

On Thursday, credit-rating agencyS&P Global Ratings downgraded Manitoba's credit rating to AA-minus from AA because it expects the province to have a debt burden for years to come, will have trouble balancing its budget and only has a two-in-three chance of meeting its current financial targets.

• Manitoba's provincial credit rating downgraded by S&P Global Ratings

On Friday, Friesen told reportersthe Selinger government is to blame because it routinely failed to meet its own fiscal targets and ignored warnings from credit-rating agencies to get its fiscal house in order.

"Certainly this is not a house-on-fire scenario, but it's not good news for the province right now," Friesensaid of the S&Pdowngradeduring a press conference in his office at the Manitoba Legislature.

"We want to move in the right direction. Our predecessors did not. What Manitobans are looking for is a government that gives a cleardirection of what it's doing,where it'sgoing and then takes steps to meet its targets."

On budget day in May, Friesen presented a plan to post a $911-million deficit at the end of the 2016-17 fiscal year, which is down from a projected 2015-16 deficit of $1.011 billion. The former Selingergovernment expected the 2015-16 deficit to be $422 million.

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The province's accumulated debt, meanwhile, is estimated at $21.9 billion.As a result,Manitoba spends about $850 million every year to service that debt, Friesen said.

He declined to speculate what effect the S&P downgrade would have on the cost of borrowing,debt-service payments or Canadian provincial bond spreads, which are the difference in bond yields for provinces with different credit ratings.

"It isuncertainright nowwhat the effect of this downgrade will be," said Friesen, saying that he is nonetheless concerned about the potential for additional debt-servicing costs.

"Wehavetounderstandthat$850millioneveryyeartowardsdebtservicingcostsisalotandanyadditionalamounts spenton thatis money that can not go to frontline services."

Friesen also declined to speculate what credit-rating agencies Moody's or DBRS will do in the wake of S&P's decision.

PC finance minister blames NDP for latest provincial credit downgrade

8 years ago

Duration 2:15

Credit-rating agency S&P Global Ratings downgraded Manitoba's credit rating to AA-minus from AA because it expects the province to have a debt burden for years to come, will have trouble balancing its budget and only has a two-in-three chance of meeting its current financial targets.He said although he met in Toronto with S&P, herejects the notion the downgrade reflects upon the Pallister government's performance.

"I don'tthink Manitobanswould suggest that somehow a decision undertaken yesterday by acredit-ratingagency would reflecton a government that's been inpowerless than three months," Friesen said.

He said the NDP are to blame for both the S&P downgrade and a previous downgrade by Moody's last summer. Moody's first warned the Selinger government to get its house in order in 2014, he said.

"Manitobansmustrecognizethedecisiontaken yesterdayby S&Preflects on the previous NDPgovernment'sinability to meet their own fiscal targets," he said.

"Weknow it is agovernmentthatoverspentits plannedbudgeteach and every year.Clearly the messagefrom thecredit rating agency is meeting your budget targets matters greatly."

Manitoba interim NDP leaderFlor Marcelino rejected the finance minister's assertions.

Another credit downgrade for Manitoba

8 years ago

Duration 1:20

Progressive Conservative Finance Minister Cameron Friesen says Manitoba's former NDP government is to blame for the province's latest credit downgrade.

"Maybe Mr. Friesen forgot our government incurred a huge deficit because of the 2011 flood and then we had the 2014 floods and we had to respond to those emergencies," she said in her office.

"Would we rather leave all those victims of floods never mind, don't do anything to mitigate the situation - just to maintain a balanced budget? Of course not. That's foolhardy. We responded to the needs of the people and the needs of the community."

Friesen said his government has hired consulting firm KPMG to conduct a value-for-money review of the province's spending. The $740,000 review will begin in days, he said.

The province is also engaging in a health-spending review and a red-tape review and has started tightening its fiscal belt, he said.

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The Tories donot, however,plan to balance Manitoba's budget until their second term, which would begin in 2020 if they are re-elected.

Michael Benarroch, dean of the Asper School of Business at the University of Manitoba, said it'saccurate for Friesen to say the PCs inherited a fiscal mess from the NDP.

Benarroch said he doesn't expect thecredit downgrade to affectManitoba's finances immediately.

While interest rates are low right now, when they go up, incrementallyhigher rates will lead to more accumulated debt, which "could become a problem in the future for Manitoba."