British Columbia lost its top credit rating from S&P Global Ratings, which said provincial debt will rise sharply over the next few years because of the economic shock of COVID-19.

Canada’s third-largest province will run a deficit this fiscal year that’s “significantly larger” than expected when the pandemic began, which will likely lengthen the time to return to fiscal balance, S&P said in a statement Wednesday explaining the one-notch downgrade to AA+. The move comes less than two weeks after Fitch Ratings took a parallel rating action.

Finance Minister Selina Robinson presented a budget in April that projected a budget deficit of $9.7 billion (US$7.8 billion) in the current fiscal year, which ends March 31, 2022, and smaller deficits for the two years after that.

All told, the province’s tax-supported debt is likely to reach $102 billion or 172 per cent of operating revenue by next March, rising to 195 per cent by 2024, the rating company said.

Those numbers mean that B.C.’s key fiscal and debt metrics are no longer comparable with AAA-rated peers, S&P analysts including Stephen Ogilvie said. Before the pandemic, debt was about 123 per cent of revenue.

“The COVID-19 pandemic’s blow to the provincial economy has turned after-capital results into large deficits and is elevating the burden of tax-supported debt,” S&P said.