An international agency downgraded B.C.’s credit rating due to “persistent large deficits.”
S&P Global published its rating report on April 2, lowering B.C.’s credit rating to A from A+, just a little over two weeks after Moody’s Ratings also downgraded its rating for the province.
A credit rating is an assessment of the borrower’s ability to pay both interest and the principal balance.
“[The] government borrows billions of dollars every year to fund services like health care, like education and to spend as well on major infrastructure projects. So, when a credit rating goes down, that means that investors are seeing more risk,” said Jairo Yunis, the director of policy for the Business Council of B.C, in a March interview with Daily Hive.
To compensate for that risk, investors will ask for a higher interest rate, thus costing the province more money.
“And every additional dollar spent on interest is a dollar that can’t go to health care, that can’t go to education … That’s the real world impact of a downgrade.”
B.C.’s 2026-27 budget projected a historic deficit, increasing by nearly 40 per cent year-over-year to $13.3 billion on an operating budget of $98.83 billion.
S&P Global also gave B.C. a “negative outlook,” stating that there’s a one-in-three chance that over the next two years, B.C.’s after-capital deficits will be close to 25 per cent of total revenues, due to slower economic growth and/or a slower management response to reduce the deficit significantly.
“We expect the Province of British Columbia (B.C.) to generate persistent operating and after capital deficits through fiscal 2029 that stand out among peers globally,” S&P Global wrote in its rating report.
Though S&P Global acknowledged some of the province’s “corrective fiscal measures” (like reducing its workforce by three per cent over three years), they stated that “sizable deficits will persist.”
“Although we expect fiscal results will slowly improve, in our view, additional steps are needed to meaningfully address the shortfall through fiscal 2029 and beyond.”
What will B.C.’s economy look like in 2026?
S&P Global expects B.C.’s economic output to be “subdued” this year, due to a slowdown in population growth and tariff-related trade uncertainty.
While they said that LNG will bolster the economy, they project that B.C.’s real GDP will grow by 1.3 per cent in 2026 and 1.8 per cent in 2027. Deloitte recently forecast that number at 1.2 per cent for 2026.