On November 21, Québec Finance Minister Éric Girard will unveil his annual economic update, a perilous exercise that has become a ritual over the years. More than a mere formality, this year's update takes on particular importance as Québec grapples with a record $11-billion deficit, announced in March, and an economic climate marked by growing uncertainty. Pressures on public finances are exacerbated by numerous government initiatives, and the ruling Coalition Avenir Québec (CAQ) must redress the situation to preserve its image as a "pro-economy" party, a mark of confidence it has built since coming to power in 2018.
Éric Girard and his team have a difficult task ahead of them. On the one hand, the government must demonstrate its commitment to maintaining a balanced budget. On the other, it must meet the expectations of a population wary of anticipated cuts. In order to limit spending, the government recently announced a temporary hiring freeze in the civil service, with the potential for far-reaching consequences.
This hiring freeze, combined with the request to health establishments and other departments to strictly adhere to their budgets by the end of the fiscal year on March 31, 2025, could force the government to make difficult political and budgetary choices. These decisions could jeopardize the execution of several large-scale projects that were part of the CAQ's ambitious action plan. For their part, public sector unions are warning that public services will suffer, while anticipated savings would be erased by private sector subcontracting.
At the same time, the Legault administration also finds itself in a position where improving its image is crucial. The current state of public finances calls not only for pragmatic decisions, but also for skillful communications to reassure both the public and investors of the province's economic solidity.
Added to this complexity is another challenge: the federal government, also facing budgetary constraints, is considering austerity measures that could affect transfer programs to the provinces. Québec depends on these transfers to balance its budget, making the situation all the more delicate. If these supports were to be reduced, it could further compromise provincial efforts to stabilize public finances.
In this context, the upcoming update will be a decisive moment for Québec, which will have to present a budget plan that is both credible and rigorous, capable of redressing Québec's financial situation without compromising essential public services. For the CAQ, it's a question of its very identity: as the party of economic growth and rigorous management of public finances.
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