Fitch downgrades Ontario on risks to balanced budget goal

Fri Dec 19, 2014 2:39pm EST
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OTTAWA Dec 19 (Reuters) - Fitch Ratings agency downgraded its rating of Ontario on Friday, citing concerns over whether the Canadian province will be able to balance its books in the time frame it has promised.

Fitch lowered its rating to AA minus from AA, while the outlook was revised to stable from negative.

Ontario, Canada's most populous province, has pledged it will have its budget balanced by 2017-18, though the province trimmed its economic growth forecasts in the fiscal update it issued last month.

Difficult actions will be necessary to achieve that goal and budget options will likely be more limited given the steps Ontario has already taken to achieve its targets, Fitch said.

The downgrade "reflects Fitch's concern that risks remain to achieving its goals, and both debt burden and the accumulated deficit will remain significantly elevated," the agency said.

The province's goal to bring its debt level down to 27 percent of gross domestic product from the current level at around 40 percent is also "likely to prove challenging," Fitch said.

The province's debt has expanded greatly since the recession, though interest on outstanding debt remains manageable, Fitch said. (Reporting by Leah Schnurr; Editing by Tom Brown)