Montreal, Thursday, February 20, 2014 – As it does every year when Quebec’s provincial budget is tabled, the Montreal Economic Institute (MEI) has updated its debt clock. According to our estimates, the public sector debt now stands at $264.2 billion. This is more than $62,090 per taxpayer and 72.5% of GDP.
“The budget deficit is causing the debt to swell, but it also results from the debt to the extent that debt service takes up a growing share of the budget,” explains Youri Chassin, the author of a new Viewpoint issued today by the MEI. “If we had reduced the debt by 25% over the last few years, our public finances would be balanced today.”
According to the auditor general of Quebec, government accounting practices result in last year’s deficit being undervalued by $626 million. Net debt, meanwhile, should have been shown as $8.1 billion higher.
“Our province is living well beyond its means. Today, many are those who admit this fact, and I am proud to say that we were among the first to sound the alarm on this topic,” declares Michel Kelly-Gagnon, president and CEO of the MEI. “As is shown in our paper published today, if it wants to avoid hitting a wall, it is paramount that the Quebec government cut its expenditures.”
In the Viewpoint from the MEI, Mr. Chassin reminds us that, in March 2010, the previous government pledged to eliminate the deficit in 2013-2014 by splitting efforts between spending control (62%) and more revenues from taxpayers (38%). However, in the last year, the government has spent about $3.9 billion more than set out for a return to fiscal balance, while revenues have risen more quickly than forecast. Despite the claims of many, the data from the department of finance show that there hasn’t been overall any austerity drive in Quebec.
The Viewpoint titled “Quebec government debt in 2014” is written by Youri Chassin, an economist and the director of research at the Montreal Economic Institute. This publication is available on our website.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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