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May 4, 2005
For immediate release

Province Receives Rating Confirmation from DBRS

Provincial Treasury

The Provincial Treasurer announced today in the Legislature that Dominion Bond Rating Service (DBRS) has confirmed Prince Edward Island’s credit rating at A (low) for long-term, and R-1 (low) for short-term borrowing. The trends remain stable.

The confirmation is supported by moderately improved fiscal results, and expectations of narrowing deficits over the next few years, assisted by a number of cost constraint measures introduced in the 2005-06 budget.

The DBRS credit ratings are positive news for the province. The importance of the “A” rating impacts directly on the interest rate the province will pay on any borrowed funds.

Minister Murphy said, “The ratings reflect confidence in the direction the province is taking in its latest budget.” The Provincial Treasurer went on to say that a number of measures contained in the 2005-06 budget lay the foundation for an improved fiscal situation. “These measures include a number of expenditure control initiatives such as modest program spending growth, aided by salary savings from the early retirement program and the consolidation of health boards,” said the Minister.

These budget measures together with additional federal revenues, due to the recent health care and equalization agreements, are expected to provide support for the province’s fiscal position.

The fiscal position of the province is reflected in an improved debt-to-GDP ratio, which compares favourably with many other Canadian provinces. Using DBRS’s approach, the debt-to-GDP ratio will rise only modestly to 36.2 per cent in 2005-06 from 36.1 per cent in the prior year due to sound economic growth and prudent fiscal management. The province’s debt-to-GDP ratio has fallen from 38.7 per cent two years ago.

The Minister noted that the latest credit rating from DBRS continues to provide the province with three long-term credit ratings in the “A” category.

Media Contact: Gerry Ridgeway
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