Press Release

DBRS Morningstar Confirms Province of Ontario at AA (low) and R-1 (middle), Stable Trends

Sub-Sovereign Governments, Utilities & Independent Power
December 22, 2022

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating and the Long-Term Debt rating of the Province of Ontario (Ontario or the Province) at AA (low) and the Short-Term Debt rating at R-1 (middle). DBRS Morningstar also confirmed the Ontario Electricity Financial Corporation’s Long-Term Obligations rating at AA (low) (based on the Province's rating). All trends are Stable.

Following the June 2, 2022, general election, Ontario's Plan to Build was reintroduced on August 9, 2022, and largely mirrored the April pre-election budget, with minor updates. As such, fiscal policy is largely unchanged, targeting gradually declining deficits and debt. Ontario subsequently released its fall economic statement on November 14, 2022, which forecasts a deficit of $12.9 billion in 2022–23, improved from a deficit of $19.9 billion based on the original April 2022 budget. This improvement largely reflects considerably stronger tax revenue than previously expected. On a DBRS Morningstar-adjusted basis, after including capital expenditure as incurred rather than as amortized, this equates to a shortfall of $20.8 billion, or 2.0% of GDP.

According to the Province's fall economic statement under the baseline scenario, the Province anticipates gradually declining deficits of $8.1 billion in 2023–24 and $0.7 billion in 2024–25. Like previous budgets, the Province provided two alternate deficit scenarios—the faster growth scenario and the slower growth scenario. Under the faster growth scenario, a surplus of $9.2 billion could be achieved by 2024–25, while under the slower growth scenario, the deficit would remain elevated at $8.5 billion in 2024–25. On a DBRS Morningstar-adjusted basis, the baseline scenario equates to deficits of 1.4% and 0.8% of GDP in 2023–24 and 2024–25, respectively. Despite a now weaker growth outlook over the medium term, all of these scenarios are improved from initial budget projections on account of better year-end results in 2021–22, and strong revenue growth year to date.

Ontario's debt-to-GDP ratio is now on a gradual downward trend. Based on the fall economic statement, the Province projects the net debt-to-GDP ratio to stabilize around 38.0% of GDP through 2024–25, representing a 3-percentage-point improvement from the original April budget. On a DBRS Morningstar-adjusted basis, the debt-to-GDP ratio is likely to gradually decline to 40.0% by 2024–25.

At the time of the budget, the Province assumed real GDP growth of 3.7% and 3.1% in 2022 and 2023, respectively. The forecast has now been revised with real growth of 2.6% assumed in 2022, before falling to just 0.5% in 2023. As private-sector forecasts continue to be revised downward, the 2023 forecast appears subject to further downside risk. Efforts by central banks around the globe to tame persistently high inflation are leading to expectations for softening global growth.

A positive rating action would depend on steadily declining deficits and the debt-to-GDP ratio approaching 35.0% or below on a sustainable basis, and/or improvement in critical rating factors. A negative rating action could result from a material deterioration in financial risk metrics, such as a significant and persistent widening of the deficit and material increase in the debt-to-GDP ratio.

There were no environmental, social, and 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 methodologies are Rating Canadian Provincial and Territorial Governments (June 1, 2022; and the Global Methodology for Rating Government Related Entities (May 6, 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.

This rating is endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed ratings:

The last rating action on this transaction took place on June 24, 2022, when Ontario’s ratings were confirmed with Stable trends.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, this is an unsolicited credit rating. This credit rating was not initiated at the request of the issuer.

With Rated Entity or Related Third Party Participation: YES
With Access to Internal Documents: YES
With Access to Management: YES

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.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: DBRS Morningstar understands further information on DBRS Morningstar historical default rates may be published by the Financial Conduct Authority (FCA) on its webpage:

Lead Analyst: Travis Shaw, Senior Vice President, Public Finance
Rating Committee Chair: Brenda Lum, Managing Director, Real Estate and Public Finance
Initial Rating Date: May 15, 1987

For more information on this credit or on this industry, visit or contact us at

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

-- Rating Canadian Provincial and Territorial Governments (June 1, 2022;
-- Global Methodology for Government Related Entities (May 6, 2022;