Quebec Finance Minister Eric Girard says
that while the province is living through an
unprecedented crisis, the economy should rebound by the end of 2021. Projecting a record $14.9-billion deficit for
the fiscal year, the government has spent $6.6
billion on recovery efforts while having lost
revenue due to decreased consumer spending
and export demand.
Girard said the government will borrow the
entire $14.9-billion value of the reserve to
cover this year’s historic deficit.
“We don’t know what is ahead of us,” Girard
said at a news conference last Friday morning
to outline the state of the province’s economy.
But he said that the spending on aid and loss
of revenue is only temporary, and pointed out
Quebec’s economy was in good shape before
the crisis. About 40 per cent of the province’s economic activity was paused this spring, which put
hundreds of thousands of Quebecers out of work.
Between February and May, Quebec lost
589,600 jobs, and GDP in the province is expected to decrease by 6.5 per cent this year.
However, the recovery will be uneven: the
report says that the restaurant and tourism
industries in particular will prevent the province from attaining its pre-pandemic employment levels in the short term.
“We are doing everything that we can to
improve potential growth,” he said, such as
fast-tracking infrastructure projects and
maintaining tax credits for business innovation.
The report says the government’s financial aid
so far has freed up $28 billion to Quebecers
and Quebec businesses.
“We had good reserves, but now we must revive the economy quickly,” Premier François
Legault said following Girard’s announcement.
$4B more for COVID-19 relief
With the severity of a second wave of infections this fall still uncertain, the government
is budgeting $4 billion in additional aid for
Quebecers and businesses.
Girard said the government will be watching to see how the economy fares in the next
several months to determine what kind of aid
would be needed.
“We are ready for a second wave. We have
more equipment, we have more tests,” Girard
Quebec will balance the 2020-2021 budget using an accounting mechanism known as the
stabilization reserve. In exceptional circumstances, the government can borrow money
to balance the budget.
The government will rely on rebounding productivity, not tax hikes, to refill its coffers, he
said, forecasting a six-per-cent increase in
GDP in 2021.
But if the public health situation does not
improve, he acknowledged reaching his GDP
targets would be “very difficult.