TORONTO

The Province of Ontario’s credit rating has been downgraded over rising deficits and doubts the government can balance the books as promised by 2017/18.

Fitch Ratings has lowered the province’s credit rating to ‘AA-’ from ‘AA,’ citing the rising red ink under Premier Kathleen Wynne.

“Fitch is concerned that the province has planned for a second consecutive increase in the annual deficit this year to $12.5 billion,” the agency says in a statement. “Fitch believes expenditure targets will continue to be challenging to achieve.

“Even if the province achieves its budget balance goal by fiscal 2018, it will be left with a sizable accumulated deficit and large debt burden that will have grown from current levels and is more consistent with a rating level of ‘AA-’.”

Ontario Auditor General Bonnie Lysyk reported earlier this month that the province will be about $325 billion in debt by 2017/18.

In a statement issued Friday in response to Fitch’s announcement, Finance Minister Charles Sousa said the government has made a number of strategic investments to spur economic growth and job creation following the global recession in 2008-09.

The budget will be balanced as forecast through measures that constrain annual program spending growth to 1.1%, he said.

The government has established savings targets of $250 million this year and $500 million in each of the following two years, he said.

“We will continue to be mindful of how we spend each dollar and are focused on eliminating the deficit while making the necessary investments to grow our economy,” Sousa said.

Interest payments on debt are still expected to be lower than forecast in this year’s budget, he said.

Progressive Conservative Finance Critic Vic Fedeli said the government has been repeatedly warned that it needs to get its fiscal house in order or risk a downgrade.

“The Province of Ontario cannot afford higher borrowing costs at a time we have a $12.5 billion deficit and pay $11 billion a year in interest on our debt, and when cuts are already starting to erode health care and other services that we hold dear,” Fedeli said in a statement. “Fitch says ‘difficult actions will be necessary’ to meet the government’s deficit elimination target. It’s time for Kathleen Wynne to take substantial action and to start taking the consequences of the fiscal hole she’s dug us into seriously.”

Fitch said it would view strong growth in GDP and steady progress in lowering the debt burden as positive credit factors.