Sound public finances

A balanced budget: A stronger financial situation

As announced in the previous budget, we are on track to achieve a balanced budget this year and maintain balanced budgets in the years to come.

Budgetary balance 2009-2010 to 2016-2017
(millions of dollars)

Source : Ministère des Finances, The Québec Economic Plan – November 2015 Update. November 26, 2015.

The plan to return to fiscal balance that was initiated in 2009-2010 and that was to conclude in 2013-2014 will achieve its objective this year. We will be able to fund our services and public policies out of our revenue, without adding to our debt.

The debt

In recent years, discussions about public finances have increasingly focused on the size of the government’s debt. The level and growth of the debt are of concern to citizens because intergenerational equity matters to them.

At March 31, 2015, the gross debt stood at $204 billion, which is 55.1% of GDP.

Gross debt and debt representing accumulated deficits as at March 31, 2015
(as a percentage of GDP)

  1. A negative entry means that the government has an accumulated surplus.
  2. Data as at March 31, 2014 given that the 2014-2015 public accounts of that province were not published as of November 19, 2015.
Sources : Governments’ public accounts, Statistics Canada and Ministère des Finances du Québec.

Québec has the biggest debt of all Canadian provinces. In interest alone, the debt costs us over $10 billion a year. That’s more than 10% of the government’s budget that cannot be used to fund our services.

We have a duty to regain control of public finances in order to better manage our debt load.

This priority is based on a logic of sustainable development: We must take action in order to leave our children and grandchildren a Québec that is in better financial health and that they can develop according to their priorities and ambitions.

The Québec government set debt reduction objectives that were enshrined in the Act to reduce the debt and establish the Generations Fund, passed in 2006. For fiscal 2025-2026:

  • the gross debt cannot exceed 45% of GDP;
  • the debt representing accumulated deficits cannot exceed 17% of GDP.

Gross debt as at March 31
(as a percentage of GDP)

In 2015, the gross debt was 55,1% of the GDP. It should be 55% in 2016, 54,6% in 2017, 50,6% in 2020. The objective is 45% in 2026.
  • F : Forecasts for 2016 to 2020 and projections for subsequent years.
Note : The gross debt excludes pre-financing and takes into account the sums accumulated in the Generations Fund.

Debt representing accumulated deficits
(as at March 31 as a percentage of GDP)

The debt representing accumulated deficits was 33,7% in 2014 and 32,7% in 2015. It should be 31,6% in 2016 and 25,1% in 2020. The objective is 17% in 2026.
  • F: Forecasts for 2016 to 2020 and projections for subsequent years.

Maintaining sound public finances

Our government pledged to maintain sound public finances by ensuring that our revenue growth exceeds expenditure growth.

We must also maintain expenditure growth at a reasonable level. To that end, we have to ensure adequate revenue growth, which hinges essentially on economic growth.

Expenditure growth had reached levels that were next to impossible to sustain. The objective is to reduce the weight of spending to its level prior to the 2008 financial crisis, by better managing public funds and improving government efficiency.

Change in consolidated expenditure excluding debt service in the economy
(as a percentage of GDP)

The consolidated expenditure were 21,5% in 2007-2008, 23,3% in 2013-2014, 23,3% in 2015-2016 and should be 22,2% in 2019-2020. The average from 1997-1998 to 2019-2020 is 21,9%.
Source : Ministère des Finances, The Québec Economic Plan – November 2015 Update. November 26, 2015.

The importance of maintaining a balanced budget and the government’s socio-economic role

With the return to sound, balanced public finances, conditions favourable to economic growth and job creation can be put in place. This will enable the government to regain its ability to make choices, so that social, family, economic and environmental policies can be developed in keeping with Quebecers’ priorities and needs.

Timeline: Tabling of the budget 2015-2016; A lower-than-expected deficit in 2014-2015; Economic growth continues in Québec despite a slowdown in most of Canada and the global economy; Return to a balanced budget in 2015-2016 and maintenance of balanced budgets.