Quebec sees deficits, will spend to fight crisis

Thu Mar 19, 2009 5:59pm EDT
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By David Ljunggren

QUEBEC CITY, Quebec (Reuters) - Quebec's Liberal provincial government said on Thursday it would run budget deficits for the next four years and predicted the economy would shrink in 2009, but also promised to boost spending to help fend off the global crisis.

The French-speaking Canadian province of 7.5 million, which relies heavily on exports to the United States, said its main priority was to stimulate the economy and protect jobs. Eliminating the deficit will take second place for now.

Finance Minister Monique Jerome-Forget said Quebec would run a C$3.9 billion ($3.1 billion) deficit in the 2009-10 fiscal year -- the first since 2004 -- and would stay in the red until the 2013-14 budget. She had already said there would be a deficit.

"Our priority at this time must be to limit the impact of the recession on our jobs, even at the price of deficits. Quebecers accept deficits in a recession," she told the National Assembly. The Liberals won a majority in the assembly in elections last December so the budget is sure to be adopted.

The government says the economy will shrink by 1.2 percent in 2009, the first year of negative growth since 1991, before bouncing back to grow by 1.9 percent in 2010.

In November 2008, Jerome-Forget predicted 2009 growth of 0.6 percent but said on Thursday that since then "the global economic outlook has become much bleaker".

She acknowledged she had no idea whether the government's forecasts would turn out to be accurate, telling reporters that "there is no certainty in the economy right now".

The steps outlined in the budget, added to other more significant past measures, mean Quebec will pump a total of an extra C$15 billion into the economy in 2009 and 2010, while raising some taxes -- including a 1 percentage point hike in the sales tax in 2011 -- and service fees.   Continued...