DBRS Morningstar and Moodys were not impressed by Minister Eric Girard’s budget, which had to defend itself today.
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“The financial outlook has clearly deteriorated, reflecting a stagnant provincial economy, higher than expected salary increases in the public sector and a drop in Hydro-Québec revenues,” underlines the DBRS Morningstar agency in their report the day after the budget.
Credit agencies, or financial rating firms, provide credit ratings to governments, which influences the latter’s borrowing rates on international markets.
“However, the province’s large and diversified economy as well as its history of solid financial management should provide stability to its credit profile,” adds the firm, which concludes that “in the medium term, this gloomy outlook could affect the ‘evolution of provincial government credit ratings’.
Deficit of 11 billion
Remember that in its budget unveiled on Tuesday, the Legault government forecasts a record deficit of 11 billion for the 2024-2025 budget year. This is almost twice as much as the deficits of the previous two years.
- Listen to the interview with Monsef Derraji, MP for Nelligan for the PLQ and Parliamentary Leader of the official opposition, via QUB:
“The drop in budgetary results is a negative credit finding which highlights the pressures that the Quebec government is facing both on revenues and on expenditures,” also write analysts from the rating firm Moody’s in a report obtained by The presse.
“These budgetary pressures are such that the province is limited in its ability to use fiscal flexibility [hausses de taxes et d’impôts, réductions de dépenses] that we usually attribute to the Canadian provinces.”
The minister reacts
The Minister of Finance, Eric Girard, was in a very bad mood Thursday morning in the National Assembly. He claimed that the media and the opposition did not understand the press release issued by the two agencies, indicating that the lights were yellow.
“Excuse me, you are in the wrong place at all […] You don’t know what you’re saying,” he said. “These agencies always publish press releases after a budget, it is their normal practice. There is absolutely no one who claims that a deficit of 1.5% of GDP is positive, neither me nor anyone. And what the agencies have said is that a high deficit is not positive.”
The minister then recalled that Quebec has long-term debt targets, and that the province has reiterated its commitment to returning to a balanced budget and that Quebec’s economy is diversified. “In short, these were professional opinions given by people who are doing their job,” he stressed.
Minister’s credibility attacked
The economy critic for the official Liberal opposition, Frédéric Beauchemin, made harsh remarks towards the Minister of Finance, attacking his credibility.
“We have had warnings from Moody’s and DBRS on Quebec’s public finances: record deficit, no plan to return to budget balance are the causes […] The credibility of the Minister of Finance, I am sorry, but I am starting to really doubt it,” he said, adding that Eric Girard was wrong in his economic forecasts, on inflation and on his budgetary forecasts. .
For his part, the Minister of the Economy, Pierre Fitzgibbon, said that he “does not know what will happen” with Quebec’s rating, but that he is “very confident” that Mr. Girard will be able to ” convince the agencies that Quebec will get through this.
“Look, we don’t know what’s going to happen. What I can say is that Mr. Girard’s plan, he has a lot of experience in it […] I think he understands what the agencies want to hear,” he said.
–With Nicolas Lachance