November 28, 2013 / 7:03 PM / in 4 years

UPDATE 2-Quebec delays balancing its budget; opposition irked

By Louise Egan

Nov 28 (Reuters) - It will take Quebec two years longer than promised to eliminate its budget deficit, the government of Canada’s second-largest provincial economy said on Thursday, earning the rebuke of opposition politicians and raising the prospect of a 2014 election.

The separatist government of predominantly French-speaking Quebec had said it would balance the budget in the current 2013-14 fiscal year, but now expects that to happen in 2015-16, said the provincial finance minister, Nicolas Marceau.

He forecast a budget deficit of C$2.5 billion ($2.4 billion) this year and a shortfall of C$1.75 billion in 2014-15, citing weak growth and disappointing revenues.

Quebec would have had to raise taxes or impose broad spending cuts to achieve its original budget target for this year, Marceau said.

“Given the current economic situation, we could have only dogmatically pursued this objective at the cost of measures that would have inhibited economic growth,” he said.

“We are, therefore, making the responsible choice of postponing the return to a balanced budget until 2015.”

The two main opposition parties lambasted the governing Parti Quebecois for its handling of the economy, which is seen growing 0.9 percent this year and underperforming the rest of Canada.

Based on the new fiscal projections, they said they would vote against the government’s March 2014 budget. A vote against the budget would be a non-confidence vote and would automatically trigger an election.

“If the numbers resemble these ones, and unfortunately there is no reason to believe they will be any different, it is very difficult for us to envisage maintaining confidence in this government when it presents the budget,” said Philippe Couillard, leader of the Quebec Liberals.

The smaller opposition party, Coalition for the Future of Quebec (CAQ), has long vowed to vote against any budget that did not show a balance and said on Thursday its position has not changed.

The Parti Quebecois, which wants sovereignty for the province but has no immediate plans to hold a referendum, holds a minority of seats in the provincial legislature and needs the backing of one of the opposition parties to stay in power.

Premier Pauline Marois has been accused of making a series of controversial policy moves, including proposing a ban on headscarves and other religious symbols by public workers, in order to engineer her own defeat and force an election rather than allow the sagging economy to become the main campaign issue.

In October, Marois announced a C$2 billion stimulus package to try to boost jobs and growth.

Marceau blamed weaker government revenues on soft inflation and growth, as well as a housing slowdown that he blamed on the federal government’s tighter mortgage lending rules.

Revenues will grow 2.6 percent in the current fiscal year, he said, compared with the 5.2 percent growth the government forecast in March.

The government has successfully limited its own spending as planned, Marceau said, forecasting 1.9 percent growth in expenditures.

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