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Monday, July 22, 2024

Quebec Faces Historic $11 Billion Budget Deficit Amid Economic Challenges

Quebec’s Finance Minister, Eric Girard, unveiled a $158 billion budget revealing one of the province’s largest deficits in history, totaling $11 billion. The deficit is attributed to a stagnant economy, exacerbated by a historic forest fire season and significant public sector wage increases.

Girard delayed plans to balance the books, now aiming for fiscal year 2029-30, citing hopes for improved economic conditions in the coming years. Despite a modest predicted GDP growth, Girard emphasized the need for favorable economic factors like potential interest rate cuts and improved hydroelectric power generation to facilitate recovery.

Dry weather conditions leading to reduced water levels in reservoirs and strikes in the public sector further strained revenues, with Hydro-Québec’s dividend to the government dropping significantly. Public sector wage increases alone added $3 billion to annual expenses.

While the deficit marks a significant financial challenge for Quebec, Girard outlined a plan to save $2.9 billion over five years, targeting reductions in corporate subsidies and requiring savings from provincially owned companies. Additionally, measures to increase tobacco taxes and tackle tax evasion are proposed.

The budget, which includes $8.8 billion in new spending with a focus on health and education, drew criticism from the Liberal Opposition, labeling it as a record deficit and accusing the government of mismanagement. Quebec’s net debt is projected to rise to $237.8 billion, the second highest among provinces as a percentage of GDP.

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