The B.C. governmentB次元官网网址檚 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, MoodyB次元官网网址檚 Investor Services calculates.

MoodyB次元官网网址檚 issued an update July 20 after B.C. Finance Minister Carole James released the provinceB次元官网网址檚 , with a mid-range scenario for steep decline and recovery in 2021. This B次元官网网址渂ase caseB次元官网网址� scenario of a deficit equal to 23 per cent of provincial revenue is B次元官网网址渃redit negativeB次元官网网址� but does not affect B.C.B次元官网网址檚 B次元官网网址淎AA stableB次元官网网址� credit rating, MoodyB次元官网网址檚 said in a statement.

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

B次元官网网址� Tom Fletcher (@tomfletcherbc)

The $12.5 billion deficit is the middle of three projections, along with a B次元官网网址渓ess optimisticB次元官网网址� and B次元官网网址渕ore optimisticB次元官网网址� outlook, depending on how the COVID-19 pandemic persists and how well business and employment adapt and recover.

B次元官网网址淚n addition to its main economic and fiscal scenario, the province presented two alternative scenarios for faster or slower economic recovery,B次元官网网址� MoodyB次元官网网址檚 said. B次元官网网址淎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.B次元官网网址�

Using the more cautious 20 per cent estimate, the B次元官网网址渓ess optimisticB次元官网网址� scenario yields a one-year deficit of $15 billion, while the B次元官网网址渕ore optimisticB次元官网网址� deficit would be $10 billion.

The full range of estimated impacts from Finance Minister

B次元官网网址� Tom Fletcher (@tomfletcherbc)

The massive deficits triggered by COVID-19 have hit credit ratings. In March, MoodyB次元官网网址檚 downgraded AlbertaB次元官网网址檚 credit rating for the second time in four months, from AA to AA Low on the petroleum-dependent provinceB次元官网网址檚 long-term debt.

And in June, Fitch Ratings downgraded CanadaB次元官网网址檚 credit rating from AAA to AA+, with CanadaB次元官网网址檚 expected deficit leading industrialized countries at $343 billion and its overall debt set to reach the $1 trillion mark.

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B.C. has changed its balanced budget legislation to permit three years of deficits, and MoodyB次元官网网址檚 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.B次元官网网址檚 B次元官网网址渂ase caseB次元官网网址� 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 B次元官网网址渓ess optimisticB次元官网网址� 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 B次元官网网址渕ore optimisticB次元官网网址� 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.

B次元官网网址淚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,B次元官网网址� the finance ministry said in its July 14 economic and fiscal scenario .

tfletcher@blackpress.ca
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