Quebec, however, is still far from a haircut, notes the Minister of Finance, Eric Girard.
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Liberal MP Frédéric Beauchemin brandished Thursday the “warnings” of the firms Moody's and Morningstar DBRS in emphasizing that Quebec still does not have a plan to return to budget balance. (Archive photo)
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The Quebec Liberal Party (PLQ) is concerned about the borrowing costs of the Quebec government, while two rating agencies judge that the $11 billion deficit forecast in Tuesday's budget is a negative for the province's credit.
These warnings were issued on Wednesday by Moody's and Morningstar DBRS in the form of press releases to investors. Both observe that Quebec's budgetary situation has worsened.
DBRS, for example, notes that even if the budget continues to emphasize on fiscal discipline and long-term debt reduction, the fiscal outlook has clearly deteriorated.
This situation, she continues, stems from a stagnant economy, larger-than-expected salary increases in the public sector and lower revenues from Hydro-Québec.
In the medium term, this gloomy outlook will reduce flexibility within the current credit rating, continues DBRS, emphasizing however that the province's large and diversified economy, as well as its history of robust fiscal management, should provide stability to its credit profile.
Quebec Budget 2024
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The rating from Moody's, which Radio-Canada also consulted, indicates for its part that the latest budgetary results represent a negative credit element (credit negative, in English) which highlights the pressures facing the Quebec government, both on revenues and on expenses.
It does not It was no less necessary for the spokesperson for the official opposition on finance, Frédéric Beauchemin, to question the credibility of the Minister of Finance, Eric Girard, believing that the latter was wrong on several occasions , particularly in its budgetary forecasts.
According to him, such alarm signals should be worrying for the Coalition Avenir Québec (CAQ) government.
< p class="StyledBodyHtmlParagraph-sc-48221190-4 hnvfyV">It's important that the CAQ pulls itself together, declared the Liberal MP for Marguerite-Bourgeoys, Thursday morning, at a press briefing. It is for all Quebecers, today, [that] it will cost more to borrow.
In the bond market, everything comes together […], so everyone will have to pay more to borrow from the bank.
A quote by Frédéric Beauchemin, Liberal finance critic
Stung, the main party replied that he did not need Moody's or DBRS to know that a deficit of 11 billion was not positive. from a point of view of Quebec's credit.
In the press scrum, Minister Girard nevertheless insisted on the fact that Quebec was still far from a discount. According to him, the press releases sent to investors on Wednesday constitute rather a preliminary opinion, which is part of a normal process of evaluating the government's budgetary policies.
[The agencies] say that a deficit of 11 billion is a negative element for Quebec's credit; [they] do not say [that they are negative] on Quebec's credit rating, he qualified.
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Quebec Finance Minister Eric Girard stressed at a press briefing Thursday that the findings from Moody's and Morningstar DBRS were consistent with a “normal process” and that if these two agencies noted the importance of the deficit planned by Quebec for the 2024-2025 financial year, they also noted certain “positive” aspects of the budget presented Tuesday.
Like the minister, the Parti Québécois (PQ) also put the warnings from Moody's and DBRS into perspective, believing that, if the government's budgetary posture could be described as complicated or difficult, it was not x27;was not as catastrophic as that of the federal government.
We must be careful, argued MP Pascal Paradis. We must not entertain this vision, that Quebec is in a risky situation.
When we look at the ratio [of the] deficit in relation to the GDP, Quebec is still in a situation which places it quite advantageously compared to all kinds of Western countries, particularly in Europe, argued Mr. Paradis.
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PQ MP Pascal Paradis refuses to say whether he is worried about the warning issued by Moody's and DBPR, but he believes that the CAQ puts Quebec in a “more difficult position” because of the “choices” it has made in terms of finances.
Tabled on Tuesday, the Legault government's 2024-2025 budget forecasts a deficit of $11 billion for the coming year, or 1.9% of the Quebec economy.
At a press briefing on Wednesday, the Prime Minister wanted to put everything into perspective, specifying that, without payment to the Generations Fund, the shortfall for the year which would instead be $8.8 billion, or 1.5% of GDP.
However, five other Liberal and PQ budgets tabled in the 1980s and 1990s predicted, relatively speaking, even larger deficits, he pointed out.< /p>
Quebec's credit rating is assessed by six rating agencies: Moody's, DBRS, Fitch, Standard & Poor's, JCR and CCXI. As of February 23, all of these firms granted the government a minimum category AA rating with a stable outlook.
Natasha Kumar has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Times Hub, Natasha Kumar worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my natasha@thetimeshub.in 1-800-268-7116
