Quebec’s deficit for the previous fiscal year fell short of the initial $11-billion projection, but the upcoming budget presentation on Tuesday is expected to reach that mark, largely due to the looming threat of tariffs from U.S. President Donald Trump. Finance Minister Eric Girard has indicated that the budget will include financial aid to assist businesses in adapting to tariffs and the evolving economic landscape with the U.S.
The new financial measures will add to costs at a time when Quebec is striving to control its spending. Girard mentioned that the deficit for the past fiscal year would be slightly lower than anticipated, indicating a better fiscal position and growth performance than expected for 2024. However, he cautioned that the deficit for 2025-2026 is projected to surpass the previous year’s deficit.
Despite the challenges in forecasting the growth rate for 2025, Girard emphasized the government’s focus on the economy while safeguarding public services and outlined plans to restore a balanced budget. The government aims to support businesses facing tariff threats through a phased approach, acknowledging the associated costs that will lead to increased public spending.
A significant portion of Quebec’s deficit in 2024-25, amounting to $3.2 billion, was structural, reflecting ongoing costly budget items considered temporary expenses. This structural imbalance poses a hurdle for achieving a balanced budget in the next five years, as government expenditures continue to exceed tax revenues.
The Institut du Québec highlighted that Quebec might not achieve a balanced budget by 2029-30 as required by law unless it curtails spending or raises taxes. Suggestions included a modest increase in the provincial sales tax or substantial spending reductions to expedite budget balancing. Despite efforts to curb public spending, Quebec’s growing debt levels hinder prompt budget balancing and meeting legal debt-to-GDP ratio requirements.
In addressing the budget challenges, Girard hinted at potential tax adjustments but ruled out a sales tax increase as proposed by the Institut du Québec. He emphasized the government’s strategic support for the economy in anticipation of economic uncertainties stemming from President Trump’s tariff threats.
Girard expressed optimism regarding the tariff situation, highlighting the opportunity for negotiation amid the U.S. pressure on Canada. He stressed the importance of convincing the U.S. that imposing tariffs would not be in their best interest.
