Quebec’s Fiscal House Is in Order Ten Years After the Recession, but …: Analysis of Quebec’s Public Finances

The Conference Board of Canada, 50 pages, June 14, 2018
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Ten years after the 2008–09 recession, the Institut du Québec simulates the impact of a new recession on Quebec’s budget. The province’s fiscal situation is fragile because expenses are under pressure and demographic trends do not favour an increase in revenues.

Document Highlights

  • Under the Institut du Québec’s (IdQ) simulations, a typical recession could lead to an additional $2-billion deficit in year one that would grow to $3 billion five years later.
  • Cuts in program expenditures and/or a stiff increase in taxes would be inevitable to balance the books.
  • Carrying less debt would allow the government to maintain services during a recession and wait for an upturn before moving to balance the books.

To tackle a new recession, the Institut du Québec recommends:

  • increasing the province’s borrowing capacity by reducing the debt ratio until 2035 and controlling expenses while maintaining predictable investments in health and education;
  • putting surpluses to better use and capping the balance of the stabilization fund.

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