Standard & Poor’s has downgraded the credit rating of the cash-strapped Ontario government, which could impact the cost of borrowing.

The agency on Monday announced it was lowering its long-term issuer credit and senior unsecured debt ratings on Ontario to A+ from AA- and affirming the province’s A+ short-term and commercial paper ratings.

“The downgrade reflects our view that Ontario is a sustained and projected underperformer on its budgetary performance and debt burden versus domestic and international peers,” S&P said in a statement.

“The stable outlook reflects our expectation that, under our base-case scenario, Ontario will continue to make slow progress in reducing its after-capital deficit in the next two fiscal years and that it will continue with its stated 10-year capital plan,” the rating agency continued.

“Ontario’s budgetary performance remains very weak, according to our criteria. Like other provinces, Ontario continues to see slow economic growth, which is limiting the natural rate of increase in its key revenue sources, such as personal and corporate taxes.”

Finance Minister Charles Sousa, who is promising to eliminate the $8.5 billion deficit by 2017-18, said Queen’s Park is still on track to balance the books.

“In its report, S&P notes that its rating is supported by its view of ‘Ontario’s very strong economy which despite recent slow growth remains well-diversified and wealthy,’” Sousa said in a statement.

“In fact, every major Canadian bank projects Ontario’s economy to grow at a faster pace than the national economy. S&P projects that Ontario’s economy will grow between 2.2 per cent -2.7 per cent annually over the next two years,” he said.

“Additionally, S&P expects ‘the province to remain on track toward fulfilling its policy objective of eliminating its operating deficit by fiscal 2018.’ Indeed, we are on track to balance the budget by 2017-18 and will do so in a way that is fair, and responsible.”

Sousa noted Ontario is the top jurisdiction in North America for foreign direct investment and the province’s unemployment rate has dropped to 6.5 per cent, which is lower than the national average.

S&P’s announcement follows Moody’s, which kept its Aa2 rating (the equivalent of AA) and DBRS, which maintained an AA- rating for the province.

Blaming the Liberals for their “spending problem,” Progressive Conservative MPP Vic Fedeli (Nipissing) said the downgrade is bad news.

“It … shows there are consequences to fiscal mismanagement,” said Fedeli in a statement.

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“Higher borrowing costs mean less money available for the things Ontarians care about, like health care and education.”

Correction - July 7, 2015: This article was edited from a previous version that mistakenly said Moody's and DBRS have maintained an AA- rating for Ontario. Incorrect information was provided to the Star.