Moody's downgrades British Columbia's credit rating amid exploding deficit

VANCOUVER — Moody's Ratings has downgraded British Columbia’s credit rating, citing an exploding deficit and broader economic uncertainty under the BC NDP government..In a report released Thursday, Moody's downgraded the province's long-term issuer and senior unsecured debt ratings to Aa2 from Aa1, and the Baseline Credit Assessment (BCA) to a1 from aa2.The agency highlighted the shift in debt burden, noting that rising leverage from large structural deficits is “shifting British Columbia from having one of the lowest debt burdens to having one of the highest among regional peers.”This marks the latest in a series of credit rating cuts for the province, with Moody's specifically executing its second downgrade in recent years following a drop to Aa1 from Aaa in April 2025.Moody's pointed to persistent fiscal pressures, including the February 2026 budget, which an Innovative Research Group poll described as the most unpopular since former Premier Gordon Campbell's 2010 Harmonized Sales Tax budget. Net satisfaction plunged sharply, marking the most damaging to government favourability under Premier David Eby.Moody's echoed concerns over fiscal management, stating that “the latest budget confirms a deterioration in long-term fiscal management relative to our previous assessment.”.The downgrade reflects a “marked deterioration in the province's credit fundamentals. This deterioration is driven by continued growth in operating and capital spending, resulting in large, structural deficits and rising leverage,” the agency explained in its rationale.The negative outlook offers little optimism for the near-term future.“Given the negative outlook, an upgrade is unlikely,” Moody's stated, adding that the rating “could be downgraded” further “if the size of structural deficits or the growth in the debt burden result in a more protracted return to balance or higher leverage than we currently forecast.”Prolonged deficits could impair the province's ability to adjust to shocks from macroeconomic or trade uncertainties, Moody's also warned, “potentially accelerating leverage growth and reducing debt affordability beyond current projections.”.Former BC Conservative party leader John Rustad took to X Thursday to comment on the cut, saying that the Moody's downgrade “marks yet another blow to British Columbia's fiscal standing under the David Eby-led BC NDP government, continuing a troubling pattern of successive cuts driven by exploding deficits and unchecked spending growth.”."This isn't some external shock or unavoidable crisis it's the direct result of years of unchecked deficit spending, skyrocketing debt, and a refusal to prioritize responsible management over ideological priorities," Rustad added.