Montreal, December 6, 2016 – Thanks to effective spending control and a budget surplus, Quebec Finance Minister Carlos Leitao succeeded in reducing the government’s gross debt by $610 million—the first reduction in nearly 60 years!
Given this provincial budget update, the MEI’s Debt Clock must also be adjusted. Based on the Finance Department’s projections, it has been revised downward in light of the slower-than-expected growth of the public sector debt, which is excellent news.
However, the total public sector debt, which includes the gross debt as well as the debts of Hydro-Québec, the universities, and the hospitals, has continued to grow, in particular due to borrowing by Hydro-Québec.
“Proportionally speaking, the gross debt decreased by 0.3% while the public sector debt was 1.2% lower than anticipated. This is therefore a small step, but a step in the right direction nevertheless,” states Youri Chassin, Economist and Research Director at the MEI.
The Finance Department’s projections for the coming years suggest that the public sector debt will continue growing, but less rapidly. It is even becoming increasingly plausible to imagine the Debt Clock running backward. “This would be great for future generations, as the debt still represents the equivalent of $69,000 per net taxpayer,” points out Mr. Chassin.
“The MEI has always been one of the strongest voices speaking out about the debt burden,” notes Michel Kelly-Gagnon, President and CEO of the MEI. “If our Debt Clock and our numerous interventions on the subject have contributed to the financial health that today allows the government to reduce its debt, we are delighted,” he concludes.
The public sector Debt Clock is available on the MEI’s website, accompanied by additional information presented in the form of questions and answers.
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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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