October 7, 1996
(Finance)

Credit rating agencies confirm province's rating
Paul Dicks, Minister of Finance and President of Treasury Board, today announced that the four credit rating agencies have now completed their annual reviews following the release of the province's Budget on May 16, 1996. The minister noted that all four agencies have confirmed the province's ratings:

In confirming the province's ratings, the agencies acknowledged government's firm commitment to maintaining the province's fiscal stability through reducing the budgetary deficit despite the difficult economic conditions. The rating agencies further noted government's resolve to restrain expenditures in the face of its limited financial flexibility. Other factors cited by the agencies as affecting the ratings include: the near term prospects for the economy in light of the winding down of Hibernia construction and the continuing moratorium in the ground fishery; cutbacks in federal transfers to government and individuals; and high debt levels.

The agencies also considered some of the more positive factors in Newfoundland and Labrador's economy. These included: the discovery of nickel, copper and cobalt reserves at Voisey's Bay for which production of ore concentrate is expected by 1998; Hibernia oil production is expected within two years; the development of a transshipment facility will produce construction jobs; the $6 billion Terra Nova offshore oil project is expected to produce its first oil flow in 2001; Husky Oil expects to begin drilling at the Whiterose oil field in 1997; and Newfoundland's newsprint mills operated at capacity in 1995 with an increased production valued at over 40 per cent of 1994 figures.

The minister stressed that the province would continue its program of maintaining fiscal stability. He also expressed optimism that this fiscal stability, coupled with the mid-term strong economic outlook, would eventually lead to an upgrading in the province's credit rating.

Contact: Karen McCarthy, (709) 729-0110.