The Quebec government is revising its budget deficit for 2021-2022 downwards due to an economic recovery that is “more vigorous than expected”.
Thus, the budget deficit for 2021-2022 is now estimated at 4.6 billion. The budget tabled on March 22 provided for a deficit of 7.4 billion before use of the stabilization reserve.
The Ministry of Finance said Friday presented a new estimate of the budget balance “in the light of new data obtained since the presentation of the budget and for the sake of transparency in the approach of the publication of the pre-election report in August”. The ministry explains this result in large part by “robust growth” in own-source revenue since the beginning of the fiscal year, growth which stood at 18.9% as at February 28, 2022. According to the ministry, the growth in revenue from corporate tax rate is “exceptional” — 51.9% as of February 28 — and similar improvements have been observed in the other provinces.
Nominal GDP growth of 13.1%
“The good performance of the economy for several months had a greater effect than expected on the growth of wages and salaries, corporate profits and household consumption, which was reflected in the own-source revenue collected by the government over the period”, can we read in the press release published on Friday.
Since the publication of the 2022-2023 budget, nominal GDP growth in 2021 was revised upwards by 1.8 percentage points, and it now stands at 13.1%.
Finance Minister Eric Girard stressed that the economic outlook remains uncertain. “This improvement in the budgetary situation for the year 2021-2022 must be put into perspective, while economic risks are accumulating, in particular the rise in interest rates, the volatility of the financial markets, the persistence of inflation and bottlenecks as well as the consequences of Russia’s invasion of Ukraine. »
The preliminary results for the full year 2021-2022 will be presented next June, in the Monthly report of financial transactions as at March 31, 2022.