Return to balanced budgets must remain a priority, says Quebec finance minister

Quebec Finance Minister Eric Girard presents an economic update Thursday, November 7, 2019 at his office in Quebec City. THE CANADIAN PRESS/Jacques Boissinot

Montreal -

The exceptional budgetary measures deployed during the pandemic must not make Quebec lose sight of the importance of returning to a balanced budget in the medium term, says Eric Girard, the province's finance minister.

A few days before the unveiling of his budget update, the minister presented the main challenges facing his department on Monday during a virtual speech organized by the province's financial regulator, the Autorité des marchés financiers (AMF).

Quebec spends 6.5 per cent of its revenues, or $9 billion, to pay interest on its debt, he said. It is the third largest budget item after health and education.

"With a debt of more than $200 billion, a one-percentage-point increase in interest rates would increase debt service by $2 billion. So it's very important that public finances, that Quebecers' efforts be pursued and that's what we're doing," Girard said. 

Last April, the Legault government postponed the objective of returning to a balanced budget until 2027-2028. It also decided to maintain its payments to the Fonds des générations, a trust fund created by the province to reduce public debt.

The minister stuck to "general comments" on the state of public finances before unveiling his update on Thursday. Last spring, the ministry anticipated a $12.3-billion deficit for the 2021-2022 fiscal year. In the past, Girard has confirmed that this amount would be revised downward, but he did not mention it in his presentation.

One issue to watch will be whether the structural deficit is still $6.5 billion, as estimated by the department. The figure is important because it represents the portion of the deficit that will not be eliminated as the economy recovers. To reduce this portion of the deficit, the government would have to reduce its spending or increase its revenues.

Québec Solidaire believes that it would be wrong for the government to prioritize balancing the budget before public services and helping the poor.

"It's really not the time for the CAQ to move towards austerity," warned Ruba Ghazal, the party's economic and finance spokesperson at a press conference earlier Monday. "We have lived through Liberal austerity, which has been a nightmare. This is not the time to do the same thing."

Girard believes that Quebec must retain its room for manoeuvre in order to be able to finance its future needs. He gave the example of climate change funding.

The minister is scheduled to present his economic update on Thursday. At the end of October, the minister had already mentioned "targeted" measures for those "who do not have increased incomes to cope with cost of living increases."

The business community will also be paying close attention to the update on labour shortages. 

This report by The Canadian Press was first published in French on Nov. 22, 2021.