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That day of reckoning for Ontario and its increasingly precarious financial fortunes appears to be at hand no matter who wins the provincial election on June 12. “The fiscal squeeze does not disappear with a change of government,” declared Finn Poschmann, vice-president policy analysis at the C.D. Howe Institute. “Certainly the pressure is there for a downgrade.”

For a province that is hugely dependent on tapping lines of credit because it spends more than it collects, a future downgrade could severely cripple Ontario’s ability to function. Higher borrowing costs would add billions more to the debt-revenue measure, which is already the highest among 10 provinces.

Clearly, Moody’s doesn’t like what it sees. Upon reading the proposed deficit increases for the next three years outlined in the May 1 provincial Liberal government’s budget, the rating agency quickly issued an “update” that warned, “The increase in planned deficits represents a credit negative for the province.”

That caution was followed by a “special comment” on May 21 when Moody’s raised another red flag after analyzing the ratio of debt to revenue of all 10 provinces and their capacity to manage it. “The creditworthiness of provinces has deteriorated,” the rating agency noted, and projections of higher deficit “is also credit negative.”

Although the report did not single out individual provinces, it did take issue with the fiscal management of seven – led by Ontario with a debt-to-revenue ratio of 237.7%, and followed by Quebec with a ratio of 189.%. According to the report, Alberta ranked lowest – and best – with a debt ratio of 31.9% of revenue. “The challenges facing Ontario are the same as in some other provinces,” explained Michael Yake, assistant vice-president at Moody’s in Toronto. “We see deficits narrowing at a lower pace but in Ontario, they are growing from previous forecasts. That’s not an ideal situation from our point of view.”