Finance Minister Craig Pardy says new affordability measures will be announced in the fall, but what they will look like remains to be seen.
The minister told reporters today that Newfoundland and Labrador is generating surplus revenue based on oil price and exchange rate projections established in the spring budget.
The provincial government benefits to the tune of $33 million for every $1 in excess of the budgeted price projection on a barrel of oil.
The province set the projected price of oil at $79 US a barrel in the spring, but as of July 15th, it was averaging $98. Pardy says the province is also benefiting from the exchange rate.
“We had the exchange rate with the U.S. dollar at .74 cents, on July 15th it was .72. For every one cent differential it would be $35 million, so both of those, we’re in the positive.”
He believes there will be a “host” of affordability measures announced in the fall, and he expects they’ll have a better read on those numbers at that time.
The province has set an 80/20 ratio for budget surplus – 80 per cent to service the debt, and 20 per cent for affordability measures.
(Photo via Suncor Energy Inc.)
Morningstar DBRS confirms province’s credit rating at ‘A’
Bond rating agency Morningstar DBRS has confirmed the province’s long-term debt credit rating at “A”, with the short-term debt credit rating at R-1 or low.
The agency has also confirmed the same credit ratings for NL Hydro’s guaranteed long-term debt and short-term debt.
The trends on all credit ratings are Stable, reflecting Morningstar DBRS’ view that despite the deterioration in the province’s budgetary outlook, risks to the credit ratings are balanced.
Confirming what the finance minister has already indicated, the agency says the province is expected to outperform its forecasts due to global commodity prices.
Morningstar DBRS also says the finalization of the MOU with Hydro-Quebec, increased federal defence spending and the potential development of the Bay du Nord project “could have significant positive fiscal and economic benefits over the medium to longer term.”
