Quebec forecasts record 2024/25 budget deficit, cites global conditions

By Thomson Reuters Mar 12, 2024 | 3:56 PM

OTTAWA (Reuters) – The Canadian province of Quebec on Tuesday forecast its 2024/25 budget deficit would hit a record C$11 billion from the C$4 billion forecast last November and blamed a sluggish global economy and investments in public services.

In its annual budget, the CAQ government also pushed back the target date for returning the budget to balance to 2029/30 from 2027/28.

Quebec is the second most populous of the 10 Canadian provinces and accounts for about 20% of the national economy.

The budget said economic difficulties were “intensifying as the effects of tighter financial conditions become more pronounced and growth turns sluggish in most economies. The early months of 2024 will remain difficult.”

The Bank of Canada this month kept interest rates at a 22-year-high of 5%, but market traders expect it to start cutting in June or July.

“More stable prices and more advantageous credit conditions will foster the recovery of economic activity in the second half of 2024 and in 2025,” the budget said.

The 2025/26 deficit will be C$8.5 billion, sharply up from the C$2.0 billion shortfall the government forecast in a fiscal update last November.

Real GDP should grow by 0.6% in 2024, down from the 0.7% Quebec predicted in November, and accelerate to 1.6% in 2025.

The net-to debt GDP ratio will hit 39.0% by the end of the month and keep increasing until 2025/26, before falling to 39.5% by the end of March 2029.

(Reporting by David Ljunggren; additional reporting by Promit Mukherjee; editing by Jonathan Oatis)