Dominion Bond Rating Service upgraded Nova Scotia's long-term credit rating to A-high, the highest rating achieved by the province since the agency began assessing it in the late 1980s. Last year Nova Scotia received an A rating.
"This upgrade really reflects just a continuation of that improving credit profile," Dominion analyst Travis Shaw said in an interview Monday.
Shaw said the improvement was partly due to the fact the province tabled a surplus of $16 million in its spring budget after largely sticking to its four-year plan to balance the books.
Shaw said the improved ranking is consistent with the agency's long-term ratings for Quebec, Manitoba and New Brunswick, although it is several notches below Alberta, the province with the only AAA rating.
He cautioned that it remains to be seen what impact slower than anticipated national economic growth might have on the province.
"There's still some question marks as to how supportive economic growth is going to be for the provincial economy and what kind of impact that will have on the fiscal results for the province," Shaw said.
He said there are encouraging indicators despite a slowing national economy. They include signs of some economic momentum in the United States and the somewhat reduced risk posed by problems experienced by the European economy.
"Nonetheless, the fiscal results and the fiscal performance of Nova Scotia do look relatively strong when compared to some of their provincial peers," said Shaw.
Finance Minister Maureen MacDonald said the rating is good news because it enables the province to borrow money at more favourable interest rates than it could if it were seen to be a risk by bond markets.
"It's important because it means that we're not a financial basket case. We are seen as having good fiscal management and the resolve to improve the finances of the province."
MacDonald, who is due to deliver a budget update by the end of September, wouldn't divulge details but said she remained "optimistic" the government is on the right fiscal track.
She said while the pace of the domestic economic recovery remains a concern, Nova Scotia is forecast for stronger growth than the national average because of projects such as the Deep Panuke offshore gas development and the national shipbuilding contract.