Wpg Sun: Asper dean estimates provincial credit rating change will cost millions
Manitoba’s finance minister is confident the province’s credit-rating downgrade won’t have a significant financial impact and expects to actually pay less to finance the debt this year.
…But Michael Benarroch, dean of the University of Manitoba’s Asper School of Business, estimates the credit-rating change will add millions in financing costs, even if interest rates climb only by a fraction of a percentage point.
“Each downgrade adds points on any new borrowing we do,” said Benarroch. “Moody’s is saying that the government is losing its credibility to meet financial targets.”
Benarroch said he was disappointed the finance minister didn’t respond to the news with a commitment to do everything in his power to balance the budget. The current target date to eliminate the deficit is 2018-19, delayed from an initial deadline of 2014-15.
Benarroch said the province risks further credit-rating downgrades by other agencies, potentially sparking further interest rate hikes.