Quebec Faces Record Budget Deficit Due to Economic Challenges

A stagnant economy, a historic forest fire season, and substantial public sector wage increases have culminated in one of the most significant budget deficits in Quebec‘s history as highlighted by Finance Minister Eric Girard.

Revealing a $158-billion budget with an $11-billion deficit for the 2024-25 fiscal year, Girard postponed the timeline for balancing the budget, projecting economic recovery by the 2029-30 fiscal year. The plan lacks immediate details for achieving fiscal equilibrium but anticipates better economic conditions in the future.

Quebec’s real GDP grew by 0.2% in 2023 and projects increases of 0.6% in 2024 and 1.6% in 2025, although uncertainties persist due to various factors.

Taking a hit from dry weather conditions and strikes last summer, Hydro-Québec‘s annual dividend to the province dropped, contributing to the financial strain. The deficit is also attributed to $3 billion in annual public sector salary increases.

The $11-billion figure includes a $1.5-billion contingency reserve and a $2.2-billion transfer into a debt reduction fund. Revenue is expected at $150.3 billion, with expenses amounting to $157.6 billion, focusing heavily on health and education sectors.

Girard’s savings plan targets $2.9 billion in cuts over five years, including reducing corporate subsidies by $1 billion and seeking cost reductions in provincially owned entities like Hydro-Québec and the liquor board. Rising net debt projections align Quebec’s financial reality with provinces like Newfoundland and Labrador.