Québec's 2024 Budget: Prioritizing Investment Over Balance

The Province of Québec (Québec or the Province) released its 2024 budget on March 12, 2024 (Budget 2024). While the budget continues to emphasize the Province's focus on fiscal discipline and longer-term debt reduction, the fiscal outlook has clearly deteriorated, reflecting a stagnant provincial economy, higher-than-expected public sector wage increases, and lower revenue from Hydro-Québec. Over the medium term, this subdued outlook will reduce flexibility within the current credit ratings; however, the Province's large, diversified economy along with its history of strong fiscal management should lend stability to its credit profile.

Key Highlights:
-- Budget 2024 focuses on investments in public services, namely health and education, sustainable development, and supports for citizens and communities.
-- The Province aims to table a plan to restore fiscal balance when the 2025–26 budget is released, and it expects to achieve balance no later than 2029–30.
-- The pace of debt reduction continues to slow relative to previous expectations as a result of deficits and significant investments in public infrastructure.

“On a Morningstar DBRS-adjusted basis, we expect the debt-to-GDP ratio to hover between 47% and 48% from 2024–25 through 2028–29,” said Cheryl Saldanha, Assistant Vice President, Global Sovereign Ratings. “The Province expects the net debt-to-GDP ratio to reach 40.3% in 2024–25, marginally improving to 39.5% by 2028–29.”