The Quebec government is poised to break a key election promise by confirming it will record a deficit for the current fiscal year.
When Minister of Finance Nicolas Marceau tables an economic update on Thursday, he's expected to officially announce that his government will fail will to meet its promise to balance the province's books by March 31, 2014. In fact it may take another two years before Quebec can reach the zero-deficit target.
Mr. Marceau neither confirmed nor denied a report this week in the Montreal daily La Presse that he would project a $2.5-billion deficit for the current fiscal year and $1.75-billion for 2014-15.
But he recognized that Quebec's slower-than-expected economic growth, decreased consumer spending and reduced company profits were putting a serious dent in the government's projected revenues.
"There is no one here that is saying that everything is perfect in Quebec. That being so, economic growth is moderate … We projected 1.3-per-cent growth this year. The numbers show it will be around 1 per cent," Mr. Marceau said in response to questions by Coalition Avenir Québec Leader François Legault, who attacked the Parti Québécois over "compulsive spending."
The minister attempted to reassure the financial markets by insisting that the province has kept program spending under tight control and that the drop in revenues, due to a sluggish North American economy, was beyond his control.
Mr. Marceau asserted that the government was still on target to reduce Quebec's gross debt to 45 per cent of the province's gross domestic product by 2026, but the opposition argued that the increased deficit put the province's credit rating at risk.
"The government needs to establish a plan for reaching a zero deficit as soon as possible. There is a serious risk here for the province's credit rating," Mr. Legault said.
Only two months ago, the PQ minority government reiterated its "firm commitment" to reach a zero deficit during the current fiscal year. It was the target set by the former Liberal government, which the PQ had also promised to meet.
The government's backpedalling began earlier this month when it became obvious that the province's economy had failed to generate much growth. Even Liberal Leader Philippe Couillard recognized last week the need for the government to delay reaching zero deficit by another three to four years: "For the coming year, we have to get as close as possible to a balanced budget and then have a plan for the next two or three years that will be solidly balanced."
Mr. Couillard's comments may give the government a reprieve as it takes longer to balance the books. But the opposition parties were still determined to show that the PQ's failure to meet its zero-deficit target was another indication of Premier Pauline Marois's inability to properly manage the economy.
"Since she can't increase revenues, I ask her to stop any new spending initiatives without first slashing the province's budget by a similar amount. Will she, yes or no, control Quebec's budget?" asked Liberal Opposition Leader Jean-Marc Fournier in the National Assembly on Tuesday.