The credit rating agency Moody's Investors Service announced today it has downgraded the outlook on British Columbia's debt ratings from stable to negative.

"The negative outlook reflects Moody's assessment of the risks to the province's ability to reverse the recent accumulation in debt with the softened economic outlook, weaker commodity prices and continued expense pressures," the announcement quoted Moody's Assistant Vice President Jennifer Wong saying.

It noted that B.C.'s finance minister, Mike de Jong, recently presented a second quarterly report showing the province's deficit for the 2012-2013 fiscal year had grown to $1.5 billion from the $1 billion forecast in February's budget.

"The slowing in the provincial economy, continued weak natural gas prices and delay in the expected sale of the province's Little Mountain property have translated into a wider deficit for the 2012-13 fiscal year," it said.

B.C.'s net debt is now $33.6 billion, which represents 82 percent of annual revenues. That's up from a net debt that was 65 percent of revenues in 2008. While the province plans a balanced operating budget for 2013-2014, debt is still expected to rise.

"Should the province's fiscal plan come to fruition, the province's debt burden is expected to increase moderately to approximately 94 percent of revenues in 2014-15, a relatively high level compared to other Aaa sub-sovereign peers," it said.

"Moreover, a more subdued economic outlook, compounded with lower-than-anticipated natural gas resource revenues, along with continued expense pressures presents risks to achieving the fiscal plan and to stabilizing and ultimately reversing the recent accumulation in debt."

The release applauded B.C.'s track record of prudent fiscal management, but said it will need to meet its current targets and "ultimately reverse the recent accumulation in debt over the medium term," to return to a stable rating.

Update, 6:01 p.m.: The B.C. government released a statement in response to Moody's revision from Shirley Bond, treasury board vice-chair, on behalf of the finance minister. In it she blamed global forces for the downgrade and defended B.C.'s financial record.

"Today's decision by Moody's recognizes the growing uncertainty of the global economy and the importance of fiscal prudence in uncertain economic times," she said. "It serves as a warning sign to us, and to all economies, to control spending and balance the budget. This kind of scrutiny from investors and bond rating agencies reminds us not to become complacent because economic risk remains."

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.