Downtown Vancouver is pictured June 10, 2009 in British Columbia, Canada. AFP PHOTO / Erica BERENSTEIN (Photo by Erica Berenstein/AFP via Getty Images)
A global credit rating agency has downgraded British Columbia’s credit rating for the second time in two years after the province’s budget projected a record $13.3 billion deficit and rising debt in the coming fiscal year.
In a news release on March 19, Moody’s Ratings said it had lowered B.C.’s baseline credit assessment (BCA) from Aa2 to A1. A year ago in April, Moody’s had downgraded the province’s BCA from Aa1 to Aa2.
Credit ratings indicate a borrower’s ability to pay interest and fully repay its debt upon maturity. Moody’s said the latest downgrade was due to “a marked deterioration in the province’s credit fundamentals.”
“We expect sizeable and entrenched deficits for the province over the next three fiscal years, reflecting continued spending growth in healthcare, social programs and housing affordability initiatives,” the agency wrote. It added that B.C.’s Feb. 17 budget “confirms a deterioration in long-term fiscal management relative to our previous assessment.”
The B.C. government estimated in its budget that the provincial deficit will reach $13.3 billion by the 2026–2027 fiscal year—a 38.4 percent increase from last year’s $9.6 billion projection, the highest in the province’s history.
As well, the province’s total debt is projected to hit $183 billion in 2026–27, before rising to $209.9 billion the following year, and $234.6 billion in 2028–29.
Moody’s March 19 decision also included downgrading B.C.’s long-term issuer and senior unsecured debt ratings to Aa2 from Aa1, and senior unsecured program and shelf ratings to (P)Aa2 from (P)Aa1.
Responses
B.C. Premier David Eby defended his government’s budget in response to the Moody’s decision. He said at an unrelated event in Metro Vancouver on March 19 that his administration made a “very clear choice” between making cuts to “meet a credit rating” and “prioritizing British Columbians.”
“We have to meet people where they’re at,” Eby said. “They are sicker, and they stay in hospital longer. We need to ensure high-quality health-care services and services for British Columbians generally. We have to build these projects to get our province moving.”
The premier acknowledged that rolling out the February budget was “incredibly challenging,” citing rising health care and infrastructure costs among other factors.
“Were we going to, as the Conservatives suggested, make health-care bear the brunt of cuts to be able to meet a credit rating?” he said. “Or were we going to make sure that we were doing all we can to deliver services for British Columbians, find efficiencies in government and grow the economy to make sure that we’re able to pay for the services British Columbians deserve?”
Interim B.C. Conservative Leader Trevor Halford likewise responded to the Moody’s assessment, saying in a social media post that money that should have been spent on roads, hospitals, and services instead has gone to “pay for interest on our debt.”
He added that the province “is going broke” under the Eby government.
“Bond rating agencies are giving this NDP budget the equivalent of an F,” Halford wrote. “Five credit downgrades in just four years and the NDP still won’t change course.”
B.C. has received credit rating downgrades or negative outlooks over the past two years, according to the provincial government website. The actions came from Standard & Poor’s in April 2025, DBRS Morningstar in May 2025 and February 2026, Fitch Ratings in May 2025, and Moody’s Ratings in March 2026. Moody’s April 2025 rating action is not listed on the site.
Halford said the provincial government should table a budget that serves British Columbians’ needs.
“It’s time for a new plan: one that gets spending under control and builds a province our kids can actually afford to live in,” he added.
‘Unlikely’
While announcing the proposed budget in the provincial legislature on Feb. 17, B.C.’s Finance Minister Brenda Bailey said the province was making “disciplined decisions” so that “Budget 2026 reduces the deficit, carefully and thoughtfully over time.”
“We are scrutinizing government spending and ensuring as many dollars as possible reach the front lines in classrooms and emergency rooms,” she said.
Moody’s noted in its March 19 news release that the B.C. government “continues to rely heavily on borrowing to fund operating deficits and to fund its capital program,” which could lead to higher borrowing costs.
“The rise in leverage also reduces fiscal flexibility and weakens debt affordability, with interest costs projected to rise to 6.0% of revenue in 2026–27 and 7.9% in 2028–29, from an estimated 4.7% in 2025–26,” the agency said.
The estimates align with B.C.’s budget forecast, which projected the province’s interest bite—the share of revenue consumed by debt servicing costs—would rise from 6.2 percent in 2026–27 to 8.2 percent in 2028–29. Meanwhile, the province’s debt-to-GDP ratio is projected to rise from 30.6 percent this year to 37.4 percent over the same period.
Moody’s said B.C.’s outlook remains “negative,” adding that the “lack of an articulated timeline” to return deficits to balance would make a credit rating upgrade for the province “unlikely.”
“The outlook could be stabilized if the province is able to implement a credible plan that will slow debt growth and materially reduce projected deficits faster than under our current projections,” the agency said.