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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 Executive Summary by Mia Homsy , Sonny Scarfone

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
Executive Summary by Mia Homsy , Sonny Scarfone

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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.

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.