Press Release

DBRS Morningstar Confirms the Government of Nunavut’s Issuer Rating at AA (low), Stable Trend

Sub-Sovereign Governments
November 21, 2022

DBRS Limited (DBRS Morningstar) confirmed the Government of Nunavut’s (Nunavut or the Territory) Issuer Rating at AA (low) with a Stable trend. The rating is supported by the strong institutional framework that decouples the government’s finances from a weak underlying economy and results in stable government finances and a low debt burden. The Stable trend reflects DBRS Morningstar’s view that the Territory's fiscal performance is expected to remain manageable and the debt burden low.

Nunavut's 2022–23 budget was presented on May 26, 2022, the first budget for the new government that was elected in October 2021, and is focused on the priorities as outlined in Nunavut's new mandate, Katujjiluta. Based on the consolidated budget that followed, a surplus of $108.3 million is forecast for 2022–23. DBRS Morningstar makes adjustments to recognize capital spending as incurred rather than as amortized. This equates to a DBRS Morningstar-adjusted surplus of $61.0 million, or 1.2% of GDP.

Based on the multiyear forecast included in Nunavut's May 2022 budget, the Territory projects surpluses of $62.6 million and $201.2 million in 2023–24 and 2023–24, respectively. The forecast includes contingencies of $75.0 million in each year, but excludes Qulliq Energy Corporation (QEC) and the revolving funds. DBRS Morningstar expects Nunavut's track record of strong fiscal performance, ample liquidity, and reliable federal funding will leave it well positioned to respond to challenges, including headwinds arising from persistently high inflation and increasing economic uncertainty.

Nunavut's debt is low and declining. For 2022–23, DBRS Morningstar projects Nunavut’s total debt will be $424.2 million, or 8.3% of GDP, down from 9.5% of GDP the previous year. With no new debt anticipated for the core government or QEC in the near term, DBRS Morningstar projects Nunavut’s debt-to-GDP ratio will trend downward in the coming years falling below 7.0% by 2026–27. Given the strong institutional framework, low debt burden, and capacity to afford additional debt financing, there is ample room within the assigned rating to withstand an increase in debt.

For planning purposes, Nunavut uses the Conference Board of Canada’s economic forecast for 2022, which points to real GDP growth of 6.4% and nominal GDP growth of 8.7%. Economic activity will continue to be heavily influenced by commodity prices and future developments in the resource sector along with fluctuations in government spending. Increasing concerns about weakening macroeconomic conditions and potentially softening commodity prices point to slower growth in the years ahead.

Nunavut is well placed in the current rating category. Downward rating pressure could result from a weakening of the institutional framework, while a positive rating action would require further economic diversification, a broadening of the tax base, and sustained strong fiscal performance.

Social (S) Factors
DBRS Morningstar considers access to basic services to have a relevant effect on the credit analysis and applied a negative overlay. Social risks remain prevalent, as access to basic necessities (food, shelter, and water) and the inclusion, engagement, and representation of Inuit peoples in the broader economy are key concerns facing the Territory. Nunavut’s harsh geographical setting, the legacy of colonialism, and the impact of forced relocation of peoples and loss of culture and language are likely to shape the political and economic environment for the foreseeable future. This S factor is new and was not present in the prior rating disclosure, which reflects DBRS Morningstar’s evolving approach to the application of ESG Criteria.

There were no Environmental or Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at (May 17, 2022).

All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Rating Canadian Provincial and Territorial Governments (June 1, 2022;, which can be found on under Methodologies & Criteria.

A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at:

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at

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