The New Brunswick government has avoided a credit-rating downgrade after earning an improvement in its financial outlook from negative to stable, according to the DBRS crediting rating agency.
After finding early last year that the province's economic trends were heading in a negative direction, DBRS said Thursday that it has seen a "meaningful improvement" in the fiscal and debt outlook.
The agency said the first budget of the Progressive Conservative government under Blaine Higgs was a first step toward increasing the province's credit rating, which was confirmed as A (high). There are four levels better than that.
"The budget builds on earlier announcements, which have emphasized the need to put the province's finances on a sustainable long-term path," the agency said in a news release.
The provincial budget in March projected a $23 million surplus and a decrease in the debt for the first time in 13 years.
After he became premier last fall, Higgs reiterated his goal of persuading bond rating agencies not to downgrade the New Brunswick's credit rating.
In a statement Thursday, Finance Minister Ernie Steeves said DBRS's upgrade in the financial outlook was encouraging.
"Our province took a financial hit last year when our trend rating was downgraded," said Steeves.
"A downgrade this year would have meant that the government would spend millions more to borrow money and to service the debt, which now exceeds $14 billion."
Even with the improved outlook, DBRS said it is "highly unlikely" that the outlook will be upgraded to the next outlook, or to "positive."
It also said the risk of a downgrade remains under different scenarios, including under-performance of the budget outlook, a deterioration in economic conditions, and a failure by NB Power to "demonstrate a continued reduction in leverage, causing DBRS to no longer treat NB Power as self-supported."