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Saskatchewan credit rating downgraded by Standard & Poor’s due to budget concerns

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Standard & Poors downgrades Saskatchewan’s credit rating over budget concerns, low natural resource prices. File / Global News

Low natural resource prices have prompted Standard & Poor’s to downgrade Saskatchewan’s credit rating to double-A plus from triple-A.

The agency says persistently low natural resource prices, in particular oil and potash, have had and are expected to continue to affect the province’s budget.

READ MORE: Saskatchewan potash companies lack major 2016 supply deal

The Saskatchewan government ran a deficit in the fiscal year that ended March 31 and is projected to have a deficit this year too.

The credit rating agency’s negative outlook also says in the next two years there is a one-in-three chance the province will not be able to meet its budget targets of low or no growth in operating expenditures.

READ MORE: Saskatchewan trims spending to tackle forecasted $434M deficit

It further says that Saskatchewan’s cash reserves have fallen notably and cannot be used to cover deficits.

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The report also says Saskatchewan’s financial results are less volatile than those of other provinces with resource-based economies such as Alberta and Newfoundland because of the diversity of its resource base.