State of public finances: a climate of « very high uncertainty », according to the VG

Jocelyne Richer, The Canadian Press

QUÉBEC — Québec’s public finances are in order at the end of our mandate, but nothing is certain for the years to come, due to the prevailing economic uncertainty. The uncertainty is very high, according to the Auditor General.

The budget forecasts prepared by the Legault government are “plausible”, but the impact of the economic “climate of uncertainty” on the health of Quebec’s public finances remains “unusually high”.

This is the conclusion reached by the Auditor General, Guylaine Leclerc, after examining the budget forecasts for 2022-2023 and 2024-2025 made by the Minister of Finance, Eric Girard, on the eve of the next election campaign.

His report, made public on Monday in the National Assembly, is nuanced: it mixes signals of approval with regard to the minister’s accounting methods and his forecasts, on the whole, while inviting him to show caution in regarding contingencies.

Soaring inflation, even a recession, the war in Ukraine and a possible new wave of the COVID-19 pandemic could muddy the waters and have an effect on the state of public finances in the years to come, warns the auditor in his detailed report. Labor scarcity could also hamper government spending and investment plans.

She would have appreciated that Quebec prepare “an alternative scenario”.

The forecasts formulated by Mr. Girard in terms of anticipated income, expenditure and the state of the debt are “coherent” and take into account the various accounting parameters (economic forecasts, budgetary measures, tax statistics, laws in force, etc. ), concludes the auditor, who was responsible for evaluating the report to be produced by Minister Girard at the end of this mandate. Basically, she therefore believes that he has done his homework, according to the rules in force.

It also notes that a continued rise in inflation could have a temporary positive impact on income in the state coffers and thus help reduce the deficit.

The Minister of Finance has entered prudential margins of $ 2.4 billion for 2022-2023 and $ 2.25 billion the following year, a cushion of a “relevant” height, judged Ms. Leclerc, without being able to say if that was really enough, given the prevailing climate of uncertainty. Quebec has set aside $2 billion to counter COVID-19 in 2022-2023.