ISTANBUL

Fitch Ratings said Tuesday that it affirmed Canada's long-term foreign currency issuer default rating at AA+ with a stable outlook.

"Canada's ratings reflect strong governance, high per-capita income and a macroeconomic policy framework that has delivered steady growth and generally low inflation," the rating agency said in a statement.

These strengths, however, are balanced by a high public debt burden, it added.

Fitch expects Canada's government deficit to rise to 1.5% of GDP this year but to fall slightly to 1.4% and 1% in 2025 and 2026, respectively.

"The weakened fiscal position reflects rapid expenditure growth amid a stagnant economy. Higher interest costs will also continue to weigh on government finances," said the statement.

The Bank of Canada on June 5 reduced the policy rate by 25 basis points, its first rate cut in more than four years, while the central bank is expected to hold the rate steady at its next meeting, which will conclude Wednesday.

Fitch forecasts Canada's economy to expand 1% this year and 1.5% in both 2025 and 2026.