The minister of Finance Eric Girard at a press conference in Quebec city, Friday
June 19, 2020 10h43
Updated at 12h58
COVID-19: the finance of Québec, dry [VIDEO]
The Canadian Press
QUEBEC – After three months of struggle conducted against the virus of the COVID-19, finance of Quebec are in sec.
The deficit will reach historic levels in 2020-2021, nearly $ 15 billion and reducing to nil the stabilization reserve.
By caution, Quebec is anticipating a second wave before long, and already includes in its forecasts of deficit, a provision of $ 4 billion, to ward off the blow.
This is what emerges from the dark picture drawn Friday by the minister of Finance, Eric Girard, the current state of Québec’s public finances.
The paper presented, entitled Portrait of the economic and financial situation 2020-2021, looks nothing like the one drawn there are just over three months, march 10, during the presentation of his budget 2020-2021, a budget of growth just before the crisis broke out.
The financial situation of Quebec, who are much changed, the minister was keen to draw a state of play, unusual at this time of the year for a Finance minister.
The government did not take advantage of this update is to announce new measures, contrary to what is called the official opposition.
In recent weeks, Mr. Girard had predicted that the annual deficit is estimated to be between 12 and $ 15 billion. This will ultimately 14.9 billion $.
The document of a hundred pages made public Friday, contains in fact little data that were not already known, for the most part.
The minister confirmed that the government had to inject in recent months, $ 3.7 billion in the health system, because of the health crisis, not to mention a billion $ of measures for workers and $ 2 billion for businesses.
During this time, in the coffers of the State, the revenues declined by $ 8.5 billion. Compared to the previous year, it is anticipated that income will drop from 6.3% in 2020-2021 in the coffers of the government.
The minister reminded that the pandemic has placed between parentheses for months about 40 % of the Quebec economy, resulting in the temporary loss of 820 500 jobs.
The unemployment rate, which was 4.5 % in February, a performance close to full employment, has soared in less than two to 17 %, in April. In may, however it has dropped to 13.7 %, and this downward trend is expected to continue “quietly” in the coming months.
All sectors of the economy are experiencing a decline, a situation which is not without creating a “lot of uncertainty”, has been agreed by the minister of Finance, at a press conference.
The private sector has been “extremely affected” by the health crisis, he noted, while we observe a decrease in consumption of 8 %, coupled with a fall in private investment of the order of 15 %.
Hence the importance, according to him, for the government to substitute short-term for the private sector, to stimulate the economy, including through the upgrading of infrastructure.
Quebec expects this year to a contraction in real GDP of 6.5 %, while in march, the minister Girard relied on economic growth to a positive 2 %.
Mr. Girard reiterated that he believed was realistic to regain the production level of December 2019 by the end of 2021.
During this time, the weight of Québec’s debt continues to rise. The ratio of its gross debt on GDP will increase from 43.4% in 2020 to 50.4 % in 2021, in a substantial increase of 22.9 billion $. It will reach the next year nearly 222 billion $.
Quebec is considering revising the law on the reduction of the debt, so as to revise the set targets over the next five years.
Despite the disastrous state of public finances, the minister Girard remains optimistic: he expects a return to a balanced budget within five years.
This is a realistic goal, in his eyes, the fact that “the decline in income (recorded in the last few months) is temporary and the majority of the spending increase is discretionary, and thus non-recurring, explained the minister. The fact of having generated a surplus for the past five years will also help, according to his predictions.
And the question for all to adopt, by then, austerity measures, cuts in services to citizens or raising the tax burden on taxpayers or businesses, he held to specify, adding that the public finances in Québec, overall, remained “extremely strong” due to its recent history.
About a possible second wave of a pandemic, it is reassuring, stating that Quebec was given the ability to deal with the dreaded second wave that could occur in the fall.
In particular, we should not know, this time of a shortage of protective equipment (masks, gowns and gloves) for the staff of the health, promises-on.
“Inventories, and orders of protection equipment are sufficient to cover the essential needs for 2020, and the government will maintain these high inventory”, one can read in the document. In the spring, Quebec was a few days of suffering a shortage of protective equipment.
Update on the economic impact of the COVID-19 on the Quebec city – June 19, 2020