The B.C. government91裸聊视频檚 deficit due to coronavirus economic effects has been estimated at $12.5 billion, but it could be 20 or even 30 per cent per cent worse than that, Moody91裸聊视频檚 Investor Services calculates.

Moody91裸聊视频檚 issued an update July 20 after B.C. Finance Minister Carole James released the province91裸聊视频檚 , with a mid-range scenario for steep decline and recovery in 2021. This 91裸聊视频渂ase case91裸聊视频� scenario of a deficit equal to 23 per cent of provincial revenue is 91裸聊视频渃redit negative91裸聊视频� but does not affect B.C.91裸聊视频檚 91裸聊视频淎AA stable91裸聊视频� credit rating, Moody91裸聊视频檚 said in a statement.

Finance Minister ' "base case" scenario brings the province's projected debt to more than $61 billion

91裸聊视频� Tom Fletcher (@tomfletcherbc)

The $12.5 billion deficit is the middle of three projections, along with a 91裸聊视频渓ess optimistic91裸聊视频� and 91裸聊视频渕ore optimistic91裸聊视频� outlook, depending on how the COVID-19 pandemic persists and how well business and employment adapt and recover.

91裸聊视频淚n addition to its main economic and fiscal scenario, the province presented two alternative scenarios for faster or slower economic recovery,91裸聊视频� Moody91裸聊视频檚 said. 91裸聊视频淎lthough the province does not present an estimate of the fiscal effects of its alternative scenarios, we forecast that they could result in a 20-30 per cent improvement or deterioration relative to the projected $12.5 billion 2020-21 deficit.91裸聊视频�

Using the more cautious 20 per cent estimate, the 91裸聊视频渓ess optimistic91裸聊视频� scenario yields a one-year deficit of $15 billion, while the 91裸聊视频渕ore optimistic91裸聊视频� deficit would be $10 billion.

The full range of estimated impacts from Finance Minister

91裸聊视频� Tom Fletcher (@tomfletcherbc)

The massive deficits triggered by COVID-19 have hit credit ratings. In March, Moody91裸聊视频檚 downgraded Alberta91裸聊视频檚 credit rating for the second time in four months, from AA to AA Low on the petroleum-dependent province91裸聊视频檚 long-term debt.

And in June, Fitch Ratings downgraded Canada91裸聊视频檚 credit rating from AAA to AA+, with Canada91裸聊视频檚 expected deficit leading industrialized countries at $343 billion and its overall debt set to reach the $1 trillion mark.

RELATED:

RELATED:

B.C. has changed its balanced budget legislation to permit three years of deficits, and Moody91裸聊视频檚 notes that the Bank of Canada commitment to keep interest rates a historic lows will ease the burden of beginning to repay the fast-accumulating debt.

B.C.91裸聊视频檚 91裸聊视频渂ase case91裸聊视频� economic scenario projects a 36.4 per cent drop in corporate profits compared to the February 2020 budget, a 15.9 per cent drop in retail sales and a 27.6 per cent decline in housing sales. All are key tax revenue sources for the province.

Under the 91裸聊视频渓ess optimistic91裸聊视频� scenario, corporate profits drop 45.3 per cent, retail sales would be down 19.6 per cent and housing sales would be down 36.2 per cent. The 91裸聊视频渕ore optimistic91裸聊视频� scenario is a 25.6 per cent drop in corporate profits, 9.6 per cent lower retail sales and 14 per cent lower housing sales.

91裸聊视频淚f local and global health conditions worsen significantly, households and businesses may remain cautious in their decisions for longer, and international trade may be further disrupted,91裸聊视频� the finance ministry said in its July 14 economic and fiscal scenario .

tfletcher@blackpress.ca
Like us on and follow us on .