WASHINGTON: Canada lost it's AAA debt rating on Wednesday, after Fitch downgraded the country, warning that the government's fiscal position is deteriorating amid efforts to address the coronavirus pandemic.

Fitch cut Ottawa's debt grade a notch to 'AA+' saying the country is poised to "emerge from recession with much higher public debt ratios."

Although the rising debt and deficit levels "will support recovery, the economy's investment and growth prospects face challenges," Fitch said in a statement.

The ratings agency sees gross government debt surging to 115 percent of GDP this year from 88.3 percent, and warned of rising risk the federal government will have to support the provinces.

The IMF on Wednesday projected Canada's economy would contract by 8.4 percent this year.