...The ratings on the Province of Prince Edward Island (PEI) reflect Standard & Poor's Ratings Services' opinion of the province's average economic performance and strong financial management. The ratings also reflect our view of the "very predictable and well-balanced" institutional framework for Canadian provinces, PEI's very low contingent liabilities, and average budgetary performance. In our opinion, the province's "less than adequate" liquidity relative to that of peers, high-but-improving debt burden, and weak budgetary flexibility constrain the ratings. We believe PEI's economy benefits from a large public sector that, in addition to a unique business mix, and support programs for more volatile sectors (such as agriculture) gives its economy a good measure of stability against external shocks. Its sound wealth level, averaging about US$37,250 from 2012-2014, further supports its fiscal position, in our view. Nevertheless, PEI faces an aging demographic profile and modest population...
