The ratings on the Province of Prince Edward Island (PEI) reflect Standard&Poor's Ratings Services' view of PEI's stable economy, moderate debt burden, and positive financial management. We believe the province's weak budgetary performance and liquidity constrain the ratings. PEI's unique business mix, large public sector, and support programs for more volatile sectors (such as agriculture) give its economy a good measure of stability against external shocks. Its relatively favorable demographics and fairly high wealth, at more than US$33,000 per capita, also support the province's fiscal position, in our view. However, we believe the province is subject to limited growth prospects in the next two years, given its planned spending restraint within its three-year fiscal plan and wind-down of
