N.W.T.'s credit rating lowers but outlook rated stable: Moody's Investors Service

Credit rating agency Moody's Investors Service has downgraded the Government of the Northwest Territories' credit from an Aa1 rating to Aa2.

The change reflects rising debt levels taken on through the pandemic along with "a weakening" fiscal and economic profile, according to a Moody's report from March 9. 

The report says the pandemic exposed "the precariousness" of the diamond mining and tourism sectors, which both took major hits in the last two years.

The lower rating also reflects the likelihood that the territory's GDP (gross domestic product) will not rebound to pre-pandemic levels for at least two to three years according to the Department of Finance. 

In a press release Wednesday, the Department of Finance noted that the Aa2 rating is the third highest rating available from Moody's, and still one of the highest ratings among Canadian jurisdictions.

Moody's report says the N.W.T.'s financial outlook is stable (an improvement from a previous negative assessment) and that despite continued challenges, economic contractions "have eased." It wrote that the territory still has the fiscal capacity to respond to further economic challenges and notes transfers from the federal government as a reliable source of income.

Finance Minister Caroline Wawzonek said that Moody's concerns were "not new." Despite the shift in rating, "Moody's rating still reflects its confidence in the GNWT's [Government of the Northwest Territories] ability to responsibly manage its budget and expenditures."

She said that the downgrade stems from the territory's large 2022-23 capital budget, which "provides the foundation for further economic development."

The lowered Aa2 score is still considered a sign of low credit risk, according to Moody's.