Quebec budget $11B in deficit, one of the biggest in the province's history

A stagnant economy, a historic forest fire season and billions of dollars in public sector wage increases are what Quebec’s finance minister says have led to one of the biggest budget deficits in the province’s history.

A stagnant economy, a historic forest fire season and billions of dollars in public sector wage increases are what Quebec’s finance minister says have led to one of the biggest budget deficits in the province’s history.

After hinting for weeks that Quebec’s financial situation was weak, Eric Girard tabled a $158-billion budget on Tuesday with an $11-billion deficit and a delay of his timeline to balance the books.

Quebec’s economy is so bad that the budget for the 2024-25 fiscal year doesn’t include details about how and when the province’s finances will return to balance — that will only come next year, he said. Girard would only commit on Tuesday to balancing the budget by the 2029-30 fiscal year — two years later than he had forecast 12 months ago.

Quebecers will have to wait for the government’s plan to erase the deficit, he said, because “we think the economic conditions will be better next year.” The province’s real GDP — adjusted for inflation — grew by 0.2 per cent in 2023, and the budget predicts it will increase by 0.6 per cent in 2024 and by 1.6 per cent in 2025.

“The economy is currently stopped,” Girard told reporters in Quebec City, adding that if the Bank of Canada cuts interest rates — something he said he expects in the second half of 2024 — then growth will accelerate. “If there’s rain this summer, if there’s water in Hydro-Québec’s reservoirs, if (electricity) exports restart,” he said, he’ll be in a better position to figure out when and how the books will eventually be balanced.

Aside from the sluggish economy, Girard says the province’s revenues took a hit from dry weather conditions last summer, which led to a historic fire season and reduced water levels in the electric utility’s reservoirs, leaving the provincially run corporation with less power to sell. In its annual report earlier this year, Hydro-Québec said its annual dividend to the provincial government dropped to $2.5 billion in 2023, from $3.3 billion the year before.