The territorial government received an Aa1 rating on Wednesday by Moody's Investors Service, one of the highest ratings among Canadian provinces and territories, according to a report from that authority.
British Columbia and Saskatchewan were given Aaa ratings, the highest in Moody's scale, according to reports from the New York-based service on Wednesday. Alberta's rating was Aa2, one level below that of the NWT.
Although Aa1 is the second-highest rating available from the service – often referred to as Moody's – the NWT's rating is unchanged from Moody's previous review of the territory's credit rating on Feb. 20, 2020.
"The NWT Aa1 rating reflects substantial and predictable fiscal transfers from the federal government, which cover close to 70 per cent of total revenues," senior analyst Adam Hardi said in the report. "NWT's rating also reflects prudent fiscal management evidenced by its low debt burden relative to Canadian regional governments."
But the report wasn't all good news, as it pointed out that the NWT's rating is "pressured by limited own-source revenues, an aging population that will put upward pressure on health expenditures and a narrow economic base concentrated mainly in a mature and declining diamond industry."
The issues facing the territory's mining industry have been highlighted by other observers as well, including the Conference Board of Canada, which outlined in a June report that the three diamond mines of Ekati, Gahcho Kué, and Diavik have already reached their peak, and that the suspension of operations at the Ekati site is a major factor facing the state of mining.
The Conference Board projected that mining output would drop 6.2 per cent this year and gain only 1.8 per cent in 2021.
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Moody's rating also took into consideration the fiscal fallout from Covid-19 that would spur unspecified "downside risks for the territory."
Despite its mixed findings, the Moody's rating was welcomed enthusiastically by Jenni Bruce, president of the NWT Chamber of Commerce.
"I think this is positive news and we are happy to see the government focused on accountability of their expenses during such a difficult time for the economy. We also feel it is great to see the GNWT engaging the taxpayers as they move forward."
The GNWT was also upbeat following the Moody's report.
"(It) demonstrates the confidence Moody’s has in the GNWT’s financial management despite revenue and expenditure shocks related to the Covid-19 pandemic," the GNWT said in a news release on Wednesday. "The GNWT expects an operating surplus this fiscal year, even with Covid-19 – making the GNWT one of the few provinces or territories with such a positive expected fiscal result."
Finance Minister Caroline Wawzonek said the review reflects positively on the GNWT's ability to responsibly manage its budget.
"While Covid-19 has led to additional costs, the GNWT is working hard to ensure that our finances are sustainable and we are implementing a multi-year plan to improve our financial position. I look forward to engaging with residents over the next few weeks to get their input on how best to position the GNWT’s budgeting priorities in light of the impacts the response to Covid-19 has had on our territory.”
The news from Moody's came a day after Wawzonek held a press conference outlining the background and process for public dialogue sessions on the budget for 2021. There will be four online sessions held between Thursday, July 23 and Thursday, July 30.
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The budget development process will also include shifting to four-year business planning.