Quebec still forecasts a deficit of $11 billion for 2024-2025

The economic update presented Thursday by Quebec Finance Minister Eric Girard keeps the focus on a deficit of $11 billion for the current year. Because even if growth for 2024 will be twice as strong as expected, portfolio spending will increase by 2.5 billion.

In his Update on the economic and financial situation of QuebecMr. Girard notes that the gross domestic product (GDP) of the province, like that of Canada, should ultimately be 1.2% in 2024, rather than 0.6% as he expected when submitting his budget for the year 2024-2025, last spring.

Economic recovery beginsnotes the minister, who will benefit in particular from the resulting increase in state revenue to increase government spending and respond to the priority issues of Quebecers.

Portfolio spending, first and foremost, will increase by $2.5 billion, including $898 million in Health and Social Services and $796 million in infrastructure investments.

The announcements included in Minister Girard’s economic update are, however, limited, to the extent that growth forecasts for 2025 have been revised downwards, from 1.6% to 1.5%, and that the anticipated deficit in 2025-2026, which was $8.5 billion, is now valued at $9.2 billion.

Among the new spending announced by the government is support for the operating deficits of public transport companies of $880 million from 2025 to 2028 as well as an additional sum of $250 million to assist victims of the post-tropical storm. Debby.

The economic update also provides for an indexation of the tax system of 2.85% in 2025, i.e. above the consumer price index (CPI) of 2024, which is expected to be 2.5%. An increase in the family allowance of up to $83 per year per child is notably planned.

The postponement of the deadline for the end of the use of private health agencies in Montreal, Montérégie, the Capitale-Nationale and Chaudière-Appalaches also explains in large part why the Quebec state will have to use the increase in revenue generated prudently. by the good performance of the economy.

Quebec will even be forced to use half of the contingency provision that it had budgeted for the current year last spring, or $750 million out of $1.5 billion.

Tax expenditure review begins to pay off

Quebec still intends to return to a zero deficit by 2029-2030. To do this, however, he will have to present a plan to return to budget balance next year. Minister Girard is nevertheless delighted to have found 700 million dollars within the framework of review of tax expenditures which he undertook last spring.

As expected by many observers, the age of eligibility for the tax credit for career extension will increase from 60 to 65 in 2025. Some 200,000 workers will be affected. They will no longer have access to this measure which had the potential to save them up to $1,540 per year.

This tax credit has existed since 2012. However, the average retirement age has increased from 61.3 years in 2011 to 64.7 years in 2023, underlined Thursday Minister Girard, according to whom this tax credit ‘is more too effective that he already was.

The review undertaken last spring by the government has so far made it possible to reduce the deficit forecast at the end of the government’s financial framework, in 2028-2029, from $3.9 billion to $3.2 billion, a shortfall of win that Quebec presents as a structural deficit.

The debt burden, for its part, will increase less than expected. While it is still expected to reach 39% of GDP as of March 31, 2025, this ratio should increase to 39.8% rather than 40.3% in 2026, before starting to decline. Quebec maintains its objective of bringing this rate below 30% in 2037-2038.

With information from The Canadian Press