Quebec says deficit is $1.2B higher than expected

Quebec Finance Minister Eric Girard presents his provincial budget to the Quebec National Assembly on Tuesday, March 12, 2024. LA PRESSE CANADIENNE/Jacques Boissinot

The Quebec government announced Friday that its deficit for the 2023-2024 fiscal year is higher than expected, reaching $7.5 billion due to stagnant economic activity in the province.

The revision marks a $1.2 billion increase from the figures put forward when the Coalition Avenir Québec (CAQ) government presented its budget last March.

At that time, the deficit was forecast at $6.3 billion, up from the previous estimate of $4 billion.

The CAQ government claims that economic uncertainty has led to a revision in the budget update, essentially explained by a $1.1 billion drop in autonomous revenue.

In a report published Friday on Quebec's financial situation, the government said that the stagnation is partly attributable to temporary factors, such as difficult weather conditions, major forest fires and strikes in the public and para-public sectors.

The government also points to the cut in the first two personal income tax rates announced in the 2023-2024 budget, which has moderated growth in own-source revenues.

According to the "preliminary results" presented on Friday, spending grew faster than revenues, posting growth of 2.2 per cent. Portfolio spending rose by 2.5 per cent, particularly in health and social services, family and higher education.

The deficit related to activities, i.e. before taking into account revenue payments of $2 billion to the Generations Fund, stood at $5.4 billion.

Finance Minister Eric Girard maintained that the increase in the deficit did not call into question the government's plan to return to balanced budgets "by 2029-2030 at the latest."

"We have been at work since last March to optimize government action, and we are continuing to examine all government spending in order to identify sources of savings," he said in a press release.

When the budget was presented, the government indicated that the projected deficit for 2024-2025 would reach $11 billion, considering the contribution to the Generations Fund.

The government said it was embarking on an operation to "optimize" government actions to generate $2.9 billion in additional revenue.

This report by The Canadian Press was first published in French on June 28, 2024.