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Quebec budget

Quebec: Fall 2024 Update - The Projected Deficit Is Not Worse for This Year, but…

November 21, 2024
Jimmy Jean
Vice-President, Chief Economist and Strategist

The deficit for 2024–25 is maintained at $11.0B (1.8% of GDP). Revenues are expected to be $152.6B (4.9% growth), compared to estimated expenses of $160.6B (6.0% growth).

While revenues were revised upwards by the $1.6B bump in federal transfers, new spending initiatives and, to a lesser extent, higher borrowing costs, more than offset these gains. The Update includes new measures totalling $2.1B over five years, more than half of which is dedicated to public transit.

To make up for the shortfall, the government is counting on nearly $1B in savings from its review of fiscal expenses and is drawing $750M from its $1.5B contingency allowance for 2024–25. That said, the projected deficit is revised upward for 2025–26 (from $8.5B to $9.2B) and remains unchanged for the next two fiscal years.

Quebec’s real GDP growth for 2024 is revised up to 1.2% (from 0.6% in the March forecast). Growth of 1.5% is forecast for 2025. This outlook is not too far from ours and is supported by strong population growth and an improvement in household purchasing power in a context of sticky nominal wage growth and falling inflation.

The Update takes into account possible changes under the new U.S. administration, as 70% of Québec’s international exports are linked to the United States. Risks identified include potential changes to tariffs, changes in corporate and personal tax policies, and the CUSMA review scheduled for 2026.

Quebec’s funding program for 2024–25 is set at $32.5B, a reduction of $3.9B compared to the March 2024 budget. This reduction is attributable to the use of the 2023–24 pre-funded amounts and the reduction in net financial requirements.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.