The economic recovery in Quebec has opened room for the government to dole out cash to dull the bite of inflation, train workers for sought-after jobs and shore up the Canadian bottom line.
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In a budget update released Thursday in Quebec City, the government said it expects a deficit of C $6.8 billion $5.4 billion in the current fiscal year, nearly half of its March estimate. The economy has gone up 6.5% this year compared to the 4.2% previously forecast due to a surge in tax receipts.
Finance Minister Eric Girard said in a statement that Quebec's economy is currently experiencing an extraordinary recovery. The significant improvement in public finances allows us to help Quebeckers cope with the cost of living and to act to speed up economic growth by combating the labor shortage and stimulating business productivity. Despite the momentum that helped Quebec revise its deficit for the last year, the government left its target date for eliminating the deficit unchanged. The province said that Quebec's books won't be balanced until the end of the 2027 -- 2028 fiscal year.
Premier Francois Legault is trying to shift some of his focus back to the economy one year ahead of a provincial election after the start of a Covid 19 vaccine campaign for children and vaccine boosters. The measures announced Thursday address labor shortages, inflation and labor shortages.
The government expects inflation to reach nearly 4% in the fiscal year ending March 2022, the end of March 2022. It has announced a one-time payment of C $275 for individual low-income earners, or C $400 for couples, to help face the rising cost of living, increased aid to the elderly, and a bigger tax credit for childcare expenses.
Over the next five years, it promises to invest C $2.9 billion to train or attract workers in industries with high job vacancy rates, including education, engineering, construction and information technology. Over the four years, incentives worth as much as C $20,000 are included.
The government plans to use its stabilization reserve, a pool in which surpluses are automatically allocated, to bring its headline deficit this year down to C $5.6 billion.
The reserve isn't readily available but is an accounting tool that the government can use without harming its budgetary balance. The shortfall comes after a payment to a debt-reduction pool known as the Generations Fund, under Quebec's rules.
Quebec has a plan that revises down its debt financing needs. The government plans to borrow C $24.5 billion in 2021 -- a decline of C $3.9 billion less than previously predicted.
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