Bond rating agency Morningstar DBRS is judging this year’s provincial budget, which it categorizes as largely stay-the-course despite record spending and borrowing, as prudent, with two caveats.

Morningstar DBRS says commodity price volatility remains a major risk factor, with government setting its budget projections on oil prices at $US 73 a barrel.

Morningstar DBRS says the price of Brent crude was at $US 65 a barrel as of yesterday and the province already had a sizable variance of more than $200 million, if current prices were to continue. Not to mention that the fiscal year has only just begun and many forecasters have yet to adjust projections. However, even with a material and sustained drop in oil prices, the credit rating agency believes the province has flexibility within its current credit ratings to endure a period of heightened economic and policy uncertainty.

The bond rating agency says the province’s revenue forecast also incorporates the positive benefits from the MOU recently signed with the province of Quebec, even though definitive agreements have yet to be signed.

Net debt is forecast to rise to 44.7 per cent in 2025-26, up slightly from the previous year, but still below the peak of 49.8 per cent in 2020-21.