Moody’s has affirmed Newfoundland and Labrador’s credit rating at A1 but has changed the province’s outlook to negative.

Moody’s cites the sharp drop in oil prices and the province’s reduced budgetary flexibility to adjust to the shock.

A drop in revenue will lead to larger deficits and higher financing requirements than previously forecasted, says Moody’s.

The credit rating agency acknowledges the province has implemented revenue and expense measures over the last four years, but has less fiscal capacity to address the current revenue shock – exposing it to greater negative risk.

Menwhile, Finance Minister Tom Osborne says he is not contemplating public service layoffs at this time.

He says the premier has guaranteed the public service that they don’t have to worry about layoffs at this particular time. Osborne says with an economy that’s still recovering, he doesn’t think layoffs are the right move.