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Canada is at greater risk of losing its AAA credit rating than other top-rated countries if the government fails to show fiscal discipline, Royal Bank of Canada has warned on the eve of Finance Minister Chrystia Freeland’s new budget.
A downgrade has the potential to raise the borrowing costs across the economy, economist Rachel Battaglia said in a note. “Even though deeper deficits and higher associated sovereign borrowing costs may feel like a distant problem for many Canadians, the impact has the potential to trickle down to most households and businesses,” Battaglia wrote.
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Canada is one of a handful of countries to enjoy the highest credit rating from both S&P Global Ratings and Moody’s Investors Service. It has a relatively low level of net government debt, but its households are highly leveraged, partly because of high housing costs.
Freeland…
