Saskatchewan suddenly has a new shine.
The province joined an elite club of provinces on Tuesday when Standard & Poor's upgraded its debt rating to triple-A. The only provinces to share the triple-A honour are western neighbours Alberta and British Columbia.
The new rating caps off a dramatic turnaround for a province that was a fiscal mess in the 1980s, and in more recent years saw skilled workers leaving in droves for oil-rich Alberta. But no longer. Saskatchewan is now home to everything from potash to grain and oil, and the money from these resources has made balancing the provincial budget far easier.
Rather than quickly spending its newly-earned wealth, the provincial government has put its tax revenue toward paying the bills. S&P gave special credit to Saskatchewan for its "low-and-declining debt burden." As of March 31, the province's fiscal year-end, Saskatchewan's debt totalled $4.6-billion, representing 38 per cent of this year's projected operating revenues and only 8 per cent of its gross domestic product. Canada's federal debt-to-GDP ratio sits at around 35 per cent.
S&P also cited a strengthening provincial economy, fuelled by global demand for commodities and strong balance sheet liquidity, stemming from ample cash and short-term investments on hand. In other words, the province has a cash buffer in case an economic downturn hits.
And just like the other provinces, S&P is encouraged that Saskatchewan isn't left to fend for itself. The federal government provides "moderate support" in the form of Canada Health Transfers and Canada Social Transfer payments
The province's real GDP grew by 1.7 per cent last year after slumping 3.9 per cent in 2009, and every industry except for agriculture saw gains. Of those, mining and oil and gas experienced the biggest jump, demonstrating just how much the province has changed. Potash Corp of Saskatchewan Inc. is now a globally-recognized name, and the province can boast about its own oil reserves, stealing some of the national attention away from Alberta. Venerable companies such as Crescent Point Energy and PetroBakken Energy have set up shop.
Saskatchewan's unemployment rate is also extremely low by national standards, sitting at 5.2 per cent, the best of any province. And the data suggests that workers are returning to Saskatchewan. The province's population rose 2 per cent in 2010, the highest annual increase in more than two decades.
The future is promising. S&P added a 'stable' outlook to its rating, which "reflects our expectation that the province's operating and after-capital results will continue to improve with its strengthening economy and operating revenue growth and that liquidity will remain strong."
Saskatchewan's rating was upgraded from double-A-plus. Alberta and British Columbia both have triple-A ratings, followed by Manitoba with double-A and Ontario and New Brunswick at double-A-minus.