Compared to the budget forecasts presented by Finance Minister Eric Girard during his update last fall, the CAQ government will find itself in a $25 billion hole for the five fiscal years from 2023-24 to 2027. -28.
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Explanation: while the minister had planned to end these five years with a cumulative surplus (before transfer to the Generations Fund) of $2.5 billion, he is now announcing a cumulative deficit of $22.4 billion. Hence the gap of 25 billion with its forecasts last fall.
Still compared to last November’s update, the bulk of the gaping $25 billion hole is largely attributable to salary increases (and social benefits) of around $15 billion that the CAQ government granted to employees. of the State as part of the renewal of collective agreements, for the five years from 1er April 2023 to March 31, 2028.
- Listen to the economy segment with Michel Girard via QUB :
Income over 5 years
In terms of revenue, the Legault government will collect over the five fiscal years (2023-24 to 2027-28) some $5.35 billion less than expected last November.
This includes a juicy drop of $3.17 billion in federal transfers. As for own-source revenue, the decrease in revenue is $2.18 billion.
Concerning forecasts of independent income, Minister Girard expects to collect approximately 5.93 billion less in corporate taxes over the five years.
As for state companies (Hydro-Québec, Loto-Québec, SAQ, Investissement Québec, etc.), expected revenues are 2 billion lower.
Other revenue down by 1.2 billion: consumption taxes.
But the minister will absorb part of the three previous revenue drops with revenues higher than last fall’s forecasts in terms of personal income tax (+3.5 billion); miscellaneous income (+1.2 billion); rights and permits (+818 million); contributions for health services (+1.03 billion); of school tax (+ 373 million).
Expenses over 5 years
Regarding spending on various government portfolios, Eric Girard plans to spend some $20.34 billion more over 5 years than his forecasts made during last fall’s update.
Oh surprise! However, the minister expects to “save” an amount of 1.25 billion on the interest expense bill that he had planned to pay for the five years in question. This fell to 50.1 billion.
- Listen to the economy segment with Michel Girard via QUB :
A pillow
In its new cumulative deficit forecast of $22.4 billion for the period from 1er April 2023 to March 31, 2028, the minister included provisions for losses of $6 billion.
But these same deficit forecasts include a potential improvement in state finances of around 4 billion, thanks either to higher-than-forecast revenues or to a reduction in spending.
Result: the Legault government’s financier gives itself a small cushion of at least $2 billion overall in the event that the potential improvement in state finances does not materialize. We’ll see in 5 years!
Debt
Who says accumulation of deficits year after year, necessarily means a sharp increase in the gross debt of the Government of Quebec.
The gross debt will reach the majestic amount of 294.4 billion in 2027-28, an increase of 68.4 billion compared to the 2022-23 financial year, or 30%.
In terms of percentage of GDP, the debt will reach 44.7%, or 3.3 percentage points more than in 2022-23.