Quebec's Improved Fiscal Outlook
Quebec's Finance Minister Eric Girard has presented a significantly improved financial picture for the province, revising deficit projections downward while announcing substantial tax relief measures for workers and key industries. The fiscal update reveals a more optimistic economic trajectory than previously forecast in the March budget.
Deficit Reduction and Economic Forecast
The province now projects a deficit of $12.4 billion for the 2025-26 fiscal year after making a $2.5 billion deposit into the Generations Fund, which is dedicated to future debt payments and managed by the Caisse de Depot et Placement du Quebec. This represents a substantial improvement of $1.2 billion compared to earlier estimates. The government maintains its commitment to balance the budget by fiscal year 2029-30.
Quebec's financing requirements have also decreased significantly, with the provincial borrowing program falling to $24.3 billion for the current fiscal year - $5.4 billion less than initially projected. Government officials attribute this adjustment to reduced net financial requirements, increased use of pre-financing, and higher balances in credit policy transactions.
Tax Relief for Workers and Businesses
Beginning January 1, workers and employers will benefit from reduced contribution rates to both the Quebec Pension Plan and the Quebec Parental Insurance Plan. This measure is part of a broader strategy to alleviate financial pressure on Quebec residents and businesses.
In a move aligning with federal policy, the province is also cancelling a planned increase to the capital gains inclusion rate following similar action by Prime Minister Mark Carney at the federal level.
Support for Industries Facing U.S. Tariffs
The agriculture, forestry, and fishing sectors, which are confronting significant challenges due to U.S. tariffs, will receive more than $290 million in targeted support. The assistance will be delivered primarily through a temporary payroll tax holiday, providing immediate financial relief to affected businesses and workers in these vital industries.
Despite the positive fiscal developments, Quebec's economic growth is expected to moderate. The province's real gross domestic product exceeded expectations in 2024 with 1.7% growth, but is now forecast to slow to 0.9% in 2025 - slightly lower than the 1.1% projection made in March.
The total cost of initiatives outlined in the fiscal update amounts to $8.3 billion over five years, representing the government's balanced approach between fiscal responsibility and targeted economic support during a period of global economic uncertainty.
