The Quebec government is once again revising its deficit upwards for the 2023-2024 fiscal year, to $7.5 billion, citing a context of stagnation in economic activity in the province.
This is an upward revision of $1.2 billion compared to the figures put forward when the CAQ government presented its budget last March.
At that time, the deficit was projected at $6.3 billion, up from the previous estimate of $4 billion.
In fact, the CAQ government claims that economic uncertainty is leading to a revision to the budget balance which is essentially explained by a drop of $1.1 billion in own-source revenue.
In his report on Quebec’s financial situation, published Friday, he maintains that the stagnation is partly attributable to temporary factors such as difficult weather conditions, major forest fires and strikes in the public and parapublic sectors.
The government also highlights the reduction in the first two personal income tax rates announced in the 2023-2024 budget which had the effect of moderating the growth of own-source revenues.
According to the “preliminary results” presented on Friday, expenditures grew faster than revenues, showing a growth of 2.2%. Thus, portfolio expenditures increased by 2.5%, notably those of health and social services, family and higher education.
The deficit linked to activities, that is to say before taking into account the payments of revenues dedicated to the Generations Fund of $2.0 billion, stands at $5.4 billion.
Finance Minister Eric Girard maintained that the increase in the deficit did not call into question the government’s plan to return to a balanced budget “no later than” 2029-2030.
“We have been working since last March to optimize state action, and we are continuing to examine all government spending in order to identify sources of savings,” he said in the communicated.
When presenting the budget, the government indicated that the deficit forecast for 2024-2025 would reach $11 billion, taking into account the contribution to the Generations Fund.
The government said it was embarking on an operation to “optimize” state actions, with the aim of generating additional revenues of $2.9 billion.