The exceptional budgetary measures deployed during the pandemic should not make us lose sight of the importance of returning to a balanced budget in the medium term, affirms Eric Girard, Minister of Finance of Quebec.
A few days before the unveiling of his budget update, the minister presented on Monday the main challenges facing his ministry, during a virtual speech organized by the Autorité des marchés financiers (AMF).
Quebec devotes 6.5% of its revenues, or $ 9 billion, to paying interest on its debt, he emphasizes. This is the third budget item after health and education.
A possible rise in interest rates would represent a risk for public finances. “With a debt of over $ 200 billion,” a 1 percentage point hike in interest rates would increase debt service by $ 2 billion. “So it is very important that public finances, that the efforts of Quebecers be continued, and that is what we are doing. “
Last April, the Legault government postponed the objective of returning to a balanced budget until the 2027-2028 fiscal year. It had also decided to maintain its deposits in the Generations Fund.
The minister stuck to “general comments” on the state of public finances before the unveiling of his update on Thursday. Last spring, the ministry forecast a deficit of $ 12.3 billion for fiscal year 2021-2022. In the past, Mr. Girard has already confirmed that this amount will be reduced, but he did not refer to it in his presentation.
One point to watch will be whether the structural deficit is still $ 6.5 billion, as estimated by the ministry. This figure is important because it represents the share of the deficit that will not be absorbed with the economic recovery. To curb this portion of the deficit, the government should reduce its spending or increase its revenues.
At Québec solidaire, we believe that the government would be wrong to prioritize a balanced budget before public services and assistance to the most disadvantaged. “This is really not the time for the CAQ to move towards austerity,” said Ruba Ghazal, the party’s spokesperson for economics and finance, at a press conference earlier on Monday. We have experienced liberal austerity, which has been a nightmare. “
Mr. Girard believes that Quebec must retain its leeway in order to be able to finance its future needs. He gave the example of financing the fight against climate change.
The minister is due to present his economic update on Thursday, November 25. At the end of October, the minister had already mentioned “targeted” measures for those “who do not benefit from an increase in income to cope with increases in the cost of living”.