A $158-billion budget with an $11-billion deficit has reportedly been tabled Tuesday by Eric Girard, Quebec’s finance minister adding that the government will miss its target to balance the books.
In real dollars, he said, it could be the highest in the province’s history with the deficit for 2024-25 being more than three times higher than what the government had forecast for 2023-24.
Blaming factors including stagnant economy, a historic forest fire season, reduced water levels in the electric utility’s reservoirs and billions of dollars in public sector wage increases, Girard reportedly says, which have led to one of the biggest budget deficits in the province’s history.
Even after hinting for weeks about Quebec’s weak financial situation, Girard’s tabled a $158-billion budget with an $11-billion deficit and committed on Tuesday to balancing the budget by the 2029-30 fiscal year two years later than he had forecast 12 months ago.
The province’s real GDP, adjusted for inflation, grew by 0.2 per cent in 2023, it will increase by 0.6 percent in 2024 and by 1.6 percent in 2025, the budget.
predicts.
“Right now, we have no growth,” Girard was reported saying, noting a hike in interest rates over the last year and other difficult economic conditions.
“The economy is currently stopped…If there’s rain this summer, if there’s water in Hydro-Québec’s reservoirs, if (electricity) exports restart,” Girard told reporters in Quebec City adding that he’ll be in a better position to figure out when and how the books will eventually be balanced.
In its annual report earlier this year, Hydro-Québec said its annual dividend to the provincial government dropped to $2.5 billion in 2023, from $3.3 billion the year before.
“Here, we’re at $11 billion, but obviously it’s a forecast,” he said about Tuesday’s budget, adding: “It could be the highest deficit in terms of dollars.”
Included in the $11-billion figure is a $1.5-billion contingency reserve and a $2.2-billion, legally required transfer into a fund dedicated to reducing debt, $8.8 billion in new spending, with almost $5 billion going to health and education, sectors that Girard described as priorities for the government.
Girard said that next year he will present his plan to get Quebec out of the red, but for this year, his budget prioritizes health care and education.
With health and social services spending for 2024-25 predicted to increase by 4.2 per cent, to a total of $61.9 billion — the largest slice of the budget pie, the government plans to spend an additional $1.8 billion to keep the health-care network functioning, and $306.5 million for additional hospital beds.
As of midnight, the province is also increasing taxes for cigarettes by 25 cents per pack, and another 25 cents per pack in January, which Girard hopes will both increase tax revenue and discourage smoking.
In spite of the province’s plans to spend billions of dollars more than it will take in this fiscal year, a plan has been released by Girard to find $2.9 billion in savings over the next five years.
By including capital investments, Quebec’s net debt is projected to rise from $221.1 billion to $237.8 billion, an increase of $16.64 billion that would lead to the second highest debt among provinces as a percentage of GDP, after Newfoundland and Labrador.
