July 26, 2000
For immediate release
Province's Credit Rating Upgraded by Dominion Bond Rating Service
"This upgrading is a concrete indicator of the substantial economic and fiscal progress that has been achieved by the provincial government over the last five years. The sound fiscal performance of the province, coupled with improved economic fundamentals led them to this decision," stated Provincial Treasurer, Pat Mella.
In the credit rating decision, the rating agency indicated that the good fiscal management of the Prince Edward Island government is expected to continue. It also noted that the government's policies themselves have helped the economic expansion.
"The province's balanced approach to fiscal planning has not only strengthened its financial profile, but has contributed to the improvement in Prince Edward Island's economic fundamentals," stated DBRS.
The rating agency takes into account a comprehensive range of economic and fiscal factors in making its decisions. Some of the key factors which warranted a rating change for Prince Edward Island include:
- Budget surpluses. In the past two years, the provinces has experienced two consecutive surpluses.
- Reduced debt to GDP ratio which fell from 37 percent in 1995/96 to 31 percent 2000/01.
- Reduced net debt which had reached $996.75 million in 1998 and will be reduced to $986.1 million in 2001.
- Reduced taxes including income tax, a low income tax program and no sales tax on clothing and footwear.
- Increased level of economic growth. Based primarily on private sector investment, GDP expanded by 3.5 percent in 1999 and the economy experienced increased industrial diversification.
- Increased employment and lower unemployment. Employment has expanded at a record rate in 2000, growing by over 7 percent in the first half of the year. The unemployment rate is down to 11.5 percent in the first half of this year.
- Reduced reliance on federal transfers.
- Improved management of public expenditures. Provincial expenditures have declined from 36 percent of GDP in 1991/92 to 28 percent in 2000/01. GDP expanded by 14.2 percent from 1994/95 to the present while provincial spending increased by only 7.5 percent.
"The improved credit rating will be seen as a signal by Canadian and international businesses that PEI is an excellent and sound place for investment," said Minister Mella.