The Government of Quebec announced that it is ramping up spending in its latest budget update.
The Quebec government outlined new spending initiatives to counter the impact of inflation, train workers for sought-after jobs, and shore up the province’s finances.
In its latest budget update, the provincial government said it expects a deficit of $6.8 billion in the current fiscal year, nearly half the level estimated in March of this year. The improved fiscal outlook is mainly due to a surge in tax receipts, with the economy now seen expanding 6.5% this year compared to the 4.2% previously forecast.
Despite the momentum, which also helped Quebec revise its deficit for last year down by half, the government left its target date for eliminating the deficit unchanged. Quebec’s books won’t be balanced until the end of the 2027-2028 fiscal year, the provincial government said.
With the start of a COVID-19 inoculation campaign for children and vaccine boosters on the way, Premier Francois Legault is trying to shift some of his focus back to the provincial economy, one year ahead of an expected election. Measures announced Thursday address hot topics including inflation and labour shortages.
The government said it expects inflation to reach nearly 4% in the fiscal year ending in March 2022. It announced a one-time payment of $275 for individual low-income earners, or $400 for couples, to help with the rising cost of living; increased aid to the elderly; and a bigger tax credit for childcare expenses.
The Quebec government also promised to invest $2.9 billion over the next five years to help train or attract workers in industries with high job vacancy rates, including education, engineering, construction and information technology.
The government plans to use its stabilization reserve, a pool into which surpluses are automatically allocated, to bring its headline deficit this year down to $5.6 billion.
Quebec’s plan also revises down its debt financing needs. The government plans to borrow $24.5 billion in 2021-22, $3.9 billion less than previously forecast.
