Pandemic erases Quebec's projected surplus, throws province into $15-billion deficit

Eric Girard speaks during a news conference following a meeting with provincial and territorial finance

The first three months of the COVID-19 pandemic have battered Quebec's books, Finance Minister Eric Girard announced Friday, and it could take the province years to bounce back from "an unprecedented shock to the economy".

Girard predicts a swift rebound out of the hole with 6.0 per cent growth in 2021. "Quebecers are already taxed enough".

"We have the capacity to face a second wave", he said.

Canada's second-largest province, which at the beginning of March was counting on a sixth straight year of balanced books, now expects a C$14.9 billion ($11 billion) deficit.

In an economic update tabled Friday, Finance Minister Eric Girard said Quebec has been "hit hard" by the 100-day pandemic, forcing the province to spend massive amounts on health and relief measures for people in confinement and businesses that were forced to close. Girard said this would allow the province to have a balanced budget despite the slowdown, which he conceded could be a higher dent to the economy than 6.5 per cent, projecting unemployment for the year as a whole at 9.6 per cent. Quebec closed about 40% of its economy for eight weeks to contain the spread of Covid-19, according to Girard.

Quebec responded to the pandemic by injecting $3.7 billion in the health sector, as well as $1 billion to help workers and another $2 billion for companies. "There's obviously a lot of uncertainty but we're giving you the best that we can".

The $14.9-billion deficit for fiscal 2020-21 includes the $4-billion contingency fund as well as a $2.6-billion payment to a fund dedicated to paying down the provincial debt, which will stand at just below $200 billion in 2020.

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He says Quebec spent $6.6 billion to fortify the healthcare system, provide financial stability to citizens, and mitigate the economic effects.

Quebec has burned through its $14.9-billion stabilization fund for emergencies, which means the money it is spending on COVID-19 is going directly on to the deficit to be added to Quebec's overall debt.

The fiscal year runs from April to March.

Quebec created 77,700 jobs in 2019, and the unemployment rate was 5.1 per cent.

He said the CAQ government has increased productivity and the projected growth rate now is 2 per cent, which he hopes to maintain through further productivity increases, investment in human capital, education and training.

Instead of two per cent growth for 2020-2021, Girard says the GDP will contract by 6.5 per cent, a outcome of the fact 40 per cent of the economy has been shut down since March.

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