Barely a month and a half after having revised downwards his economic forecasts for the current year, the Minister of Finance, Eric Girard, corrects the situation again while the deficit swells by 635 million.
In question, “the recent evolution of the economic situation” which has an unfavorable effect on the government’s own revenues, he reveals in his report on the financial situation of Quebec at the end of the second quarter 2023-2024, published late Friday afternoon.
Mainly, revenues from corporate taxes suffer from this situation, which leads to lower tax revenues than expected for the government, the document explains.
Second factor cited: low precipitation in the regions where Hydro‑Québec’s main basins are located led to a reduction in electricity exports from the state company. Revenues from government enterprises for the current financial year are therefore revised downwards.
However, in order to “largely compensate for the revisions”, the minister uses the approximately 500 million that remained in his financial cousin, his “contingency provision”.
Result: Quebec no longer has any room for maneuver, and the 135 million surplus will increase the deficit forecast for 2023-2024 which now stands at $4.1 billion, after payment of revenues devoted to the Generations Fund.
“The economic slowdown has consequences on government revenues, particularly on corporate taxes, which has unfavorable effects for Quebec’s budgetary situation,” he explained in a press release on Friday.
For a second time
Regarding the deficit revised upwards, Eric Girard also mentions that “the current economic situation remains difficult, as predicted in the November 7 update.”
This is the second time that Quebec has lowered its revenues in the space of a month and a half, at a time when the labor conflict with its employees is in full swing.
At the beginning of November, during the presentation of his economic update, Eric Girard had already announced his intention to use the majority of his “contingency provision”, i.e. 1 billion, in order to compensate for revisions to his financial framework.
We were already anticipating lower revenues from personal and corporate taxes for 2023-2024, of just over 1 billion. Overall, however, all of Quebec’s revenues were revised upwards, notably thanks to Ottawa, according to the economic update.