Quebec set to borrow nearly C$13 billion in 2010-11

Tue Mar 30, 2010 4:38pm EDT
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QUEBEC CITY (Reuters) - The Quebec provincial government said on Tuesday it will borrow C$12.9 billion ($12.7 billion) in the 2010-11 fiscal year, less than this year because of borrowing already done to benefit from low interest rates.

Quebec said in its budget plan that it borrowed C$15.5 billion in this fiscal year, ending March 31, 2010, and that C$3.9 billion of that amount will be used to cover part of its 2010-11 financing program.

In 2011-12 it expects to borrow C$17.9 billion.

The Liberal government of predominantly French-speaking Quebec predicts its net debt will rise to C$152.5 billion, or 48.7 percent of gross domestic product, in 2010-11 from C$142.8 billion this year.

Using another measure - debt representing accumulated deficits - the Quebec government said it aimed to cut debt as a percentage of GDP to 17 percent by 2025-26 from the current 35.4 percent. Debt representing accumulated deficits is seen at C$110.2 billion in 2010-11, up from C$106.6 billion in 2009-10.

The government said it focuses on the accumulated deficits definition of debt, likening it to the unpaid balance on a credit card which "we must pay rapidly".

For gross debt, it targets a debt-to-GDP ratio of 45 percent by 2026 from 53.2 percent currently.

As of the end of March, 96.3 percent of the Quebec government's gross debt was in Canadian dollars, with the remainder in U.S. dollars, euros, Swiss francs and yen.

Quebec has an Aa2 rating by Moody's for its long-term debt, which designates a very strong capacity to pay interest and repay principal. The rating has been unchanged since 2006.

(Reporting by Louise Egan; editing by Peter Galloway)