The finance minister now says the overall deficit is predicted to be $4.1 billion for 2023-24.
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QUEBEC — Finance Minister Eric Girard’s prediction in November that Quebec can be in for a tough few months on the financial and monetary entrance is proving to be bang-on.
For the second time in a month and a half, Girard has revised his monetary predictions for the 12 months downward, saying the overall deficit for 2023-24 is projected to be $135 million greater than predicted in his March price range.
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He now says the overall deficit shall be $4.1 billion, after deposits to the debt-fighting Generations Fund, as a substitute of the beforehand predicted $4 billion.
His prediction that the financial system would stagnate has additionally proved appropriate, with progress pegged to be a mere 0.5 per cent. Whereas inflation just isn’t hovering because it was earlier than, costs stay excessive, particularly on the grocery retailer.
The labour market state of affairs “stays tense,” with the unemployment fee rising from 3.9 per cent in January to five.2 per cent in November.
“The financial slowdown is affecting authorities revenues, together with from state-owned corporations, which is translating into an unfavourable budgetary state of affairs,” Girard stated in an announcement launched with the monetary outcomes for the second quarter (ending September) of 2023-24 on Friday.
“The present financial state of affairs stays troublesome, as was foreseen within the Nov. 7 financial replace.”
The monetary outcomes reveal Quebec’s revenues from earnings tax and state-owned corporations similar to Hydro-Québec are down throughout the board — $842 million much less in own-source income from gadgets like earnings tax and $370 million much less from authorities corporations.
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The drop in income from Hydro-Québec is attributed to low precipitation within the areas the place the primary reservoirs are situated, which implies much less energy to export.
The one saving grace for Girard within the two quarters was a $1.1-billion enhance in federal switch funds, which implies extra for well being, post-secondary schooling and different social applications. Whole federal transfers for the 12 months are anticipated to be $14.9 billion.
The web impact of the losses has produced a $635-million hole in Quebec’s monetary framework, Girard stated.
As occurred in his November financial replace, Girard has been compelled to dip into what was a $6.5-billion contingency fund he included within the March price range to make up the shortfall. After tapping the fund for $5 billion in his November financial replace, he has now drawn one other $500 million from the properly.
That also leaves him brief $135 million, which will get slapped onto the deficit.
The monetary outcomes don’t take note of the prices of an eventual settlement with 420,000 public-sector employees who’re threatening to broaden their labour disruptions in January if there isn’t a settlement.
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The shifts in numbers do, nonetheless, have an effect on Quebec’s complete debt.
As of March 31, 2024, internet debt is forecast to face at $217.1 billion, or 38.2 per cent of the gross home product. In comparison with the autumn 2023 financial replace, that is an upward revision of .03 share factors of GDP.
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The outcomes arrived simply earlier than Statistics Canada launched a report displaying the nation’s inflation fee holding regular at 3.1 per cent. It didn’t drop as some analysts predicted.
Quebec nonetheless leads the pack in Canada relating to inflation. The speed is 3.6 per cent, in comparison with 3.3 per cent in Ontario and three.2 per cent in British Columbia.
Quebec’s quarterly report hints at an evidence for the upper inflation: Family spending has elevated right here by 8.3 per cent within the first two quarters of 2023 in comparison with the identical interval in 2022.
Outcomes for Quebec’s third monetary quarter are anticipated in March, at about the identical time the Coalition Avenir Québec authorities tables the spring price range.
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