Moody’s said the future course of Nova Scotia’s credit ratingdepends on continued careful management of some significantfiscal and economic challenges. These include slower-than-expected offshore oil industry growth and the need to keep salaryincreases for government employees to a reasonable level. “Strong fiscal management means that government will have theresources to invest in the things that Nova Scotians care about – like better health care, quality education in the classroom andprograms for those in need,” said Premier John Hamm. Another major international bond rating agency has acknowledgedthe government’s efforts to keep Nova Scotia’s finances on track. The highly respected Moody’s Investors Service has raised theprovince’s debt rating to A2 from A3, citing improvement in NovaScotia’s provincial debt indicators, economic gains of recentyears and the government’s commitment to maintaining balancedbudgets and achieving debt reduction. The rating outlook isstable. The revised rating from Moody’s follows similar upgrades by twoother bond rating agencies over the last year. Standard & Poor’sRating Services increased its credit rating for Nova Scotia onAug. 20 and the Dominion Bond Rating Service issued an upgrade inlate 2003. A higher credit rating makes the province’s bonds more attractiveto investors and helps lower the overall cost of borrowing. Evenwith a balanced budget, the province must borrow money to managethe existing Nova Scotia debt. “It is encouraging that all three major bond rating agencies haverecognized our progress in managing the province’s finances,”said Finance Minister Peter Christie. “We have worked hard in thelast five years to ensure Nova Scotia’s financial positioncontinues to improve, and we remain committed to that goal.” In a news release issued Wednesday, Sept. 1, Moody’s noted anumber of positive fiscal and economic trends in Nova Scotia: “I would like to thank Nova Scotians for their dedicated effortand their sacrifices as we have made the tough choices to improvethe province’s finances.” Nova Scotia’s economic gains as measured by Gross Domestic Product (GDP) growth in the five years ending 2003 matched those of Canada as a whole, reflecting performance notably better than the previous five years; Government enacted legislation in 2004 to implement a debt reduction plan. It is committed to achieving a reduction of government debt by 2007-08, by generating surpluses to close the gap between budget results and cash requirements; The province has reduced its exposure to liabilities such as Nova Scotia Resources Ltd and Sydney Steel Corporation; From 1993-94 to 2003-04, the ratio of debt to GDP has dropped from 51.7 per cent in to 40.9 per cent, and foreign currency exposure has declined from 42.1 per cent to 15.4 per cent.
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