Canada's ratings reflect: -- Its diversified, export-oriented, highly developed economy, recently strengthened by improving macroeconomic balances; -- Its improving fiscal performance at all levels of government. Recent strong GDP growth and budget surpluses at the federal and provincial levels have reduced Canada's general government debt to a projected 64% of GDP in 2001, compared to over 80% three years earlier; and -- Its stable political system, which minimizes uncertainties posed by the sovereignty movement in Quebec, and a strong political consensus on prudent economic policies. The higher long-term local currency sovereign credit rating reflects the government's success in fiscal consolidation, its improving fiscal flexibility, and its record of maintaining low and stable inflation. The ratings are constrained by: -- The
