Treasury overflows: Economic recovery boosts Québec’s finances

Treasury overflows: Economic recovery boosts Québec’s finances

The coffers are overflowing on the eve of the next election campaign due to Quebec’s revenue explosion. Inflation and the post-pandemic economic recovery are accelerating the return to balanced budgets.

• Also read: A recession is not the most likely scenario, says Girard

The auditor general concludes that the Quebec government’s budget forecasts are plausible after analyzing the primary election report presented to the National Assembly on Monday morning.

Revenues have increased in all Treasury budget columns since the last budget was presented.

Last March, Treasury Secretary Éric Girard and his officials forecast a $6.1 billion deficit and a return to balance in 2028.

However, the report now forecasts a deficit of just $729 million.

However, including payments to the Generations Fund, Quebec will have a budget surplus of nearly $1.8 billion next year, estimates Auditor General Guylaine Leclerc.

This economic and financial situation puts the government in a favorable position just days before the general elections are called.

The paying tax

The income forecasts from income tax have risen the most “particularly due to the sharp rise in wages”.

Most recently, high inflation and favorable economic conditions “led to a 9.4% increase in wages and salaries”.

The incremental growth is an additional $2.3 billion for a total of $43.5 billion related to fiscal 2022-2023.

This progression should continue in 2022-2023 and then slow down year-on-year to achieve more moderate growth.

Citizens’ tax accounts for 30% of all state revenue.

The consumption tax also made the state rich.

caution

However, the uncertainty hanging over the global economy could disrupt the only scenario envisaged by Quebec, the examiner notes. In particular, she criticizes the government’s lack of a plan B.

“It would have been useful, like other institutions, to present an alternative scenario that allows assessing the potential impact of the materialization of the main current risks on the economic outlook and the financial framework,” says the chartered accountant. A scenario based on a recession would have made sense, Ms Leclerc argues.

In particular, he points to the burst of inflation that is causing the tightening of monetary policy and the war in Ukraine.