Downgrade or Credit Watch?
Plenty of spin from the Minister of Finance Dwight Duncan in his suppertime news conference to reveal the change in outlook on Ontario’s debt from credit agency Moody’s.
“Have you got the news from Moody’s?” said Duncan with a smile knowing full well that reporters had been standing on the 3rd floor of Queen’s Park waiting for him while the press release was sent out by the agency.
“This is not a downgrade” said Duncan several times during the press conference, preferring the term ‘credit watch’. A downgrade would entail an increase in the cost of servicing Ontario’s $190 billion debt, and would be a blow to a minority government already grappling with a $16 billion dollar deficit.
To call it a ”credit watch” is not quite the whole story either, as Moody’s notes in its headline that Ontario’s debt has been revised to “negative”.
Duncan passed most of this off as a result of global economic turmoil, failing to mention that Moody’s pointed out the “strong expense growth” in Ontario under the Liberal watch. Moody says that pulling back spending increases to budgeted targets will require “difficult policy decisions” and that “increased fiscal discipline” will have to be job one of the Liberal government.